A MAJOR change that affects Universal Credit claimants was revealed by the prime minister today.
Boris Johnson announced a radical shake-up this afternoon as he vowed to finally turn struggling renters into proud homeowners.
1
But what it means for savers is that they will not have their Universal Credit payments reduced.
The plans mean anyone saving to buy a home or for retirement with a Help to Buy or Lifetime ISA will keep access to Universal Credit.
They’ll have to put their savings in certain ISAs that Mr Johnson has said will not affect the benefit payouts.
He said: “We’re going to explore discounting Lifetime and Help to Buy ISA savings from Universal Credit eligibility rules.
“We’re not letting anyone claim benefits while sitting on vast savings pots that they could be drawing on. That’s not the people we’re targeting here.
“But making it easier for hard-working people to put away a little each month until they have enough for a deposit on their first home.”
It means it’s a little different for anyone saving into a standard cash or investment ISA, as they will still find this affects their benefits – depending on how much they have.
At the moment, if you or your partner have £6,000 or less in savings you can apply for Universal Credit and you face no penalties.
Most read in Money
But if either of you have more than £16,000 you don’t get Universal Credit at all.
And anything in between the two figures is considered a monthly income – which means you get less in your Universal Credit payments.
But that makes it harder for those who need the benefit to put cash aside, as the more they have saved up the more they stand to sacrifice.
Mr Johnson, himself, even explained in his speech today that prospective homeowners face rocketing property values that come with their own eye watering deposits.
But the move should help more people get onto the property ladder without having to worry as much about how they’ll fund the high up-front cost.
The Prime Minister also confirmed the extension of ‘right to buy’ to housing association homes.
The current scheme lets council tenants buy their home at a discount of up to £116,200 in London and £87,200 in the rest of England.
They need to have lived in their property for three to five years already to qualify for a 35% discount.
And there’s an extra 1% that can be claimed for every year after that.
In total it means tenants could own they own home at a cost that’s up to 70% cheaper than its value.
Meanwhile a new generation of ‘posh prefabs’ will be rolled out across the country to get more renters into high quality but cheap DIY homes.
We pay for your stories!
Do you have a story for The Sun Online Money team?
