Bloomberg News

U.K. May Charge Welfare Recipients for Long-Term Mortgage Aid

December 06, 2011

Dec. 6 (Bloomberg) -- The U.K. government is considering whether to impose a charge on long-term welfare recipients who sell their homes in return for helping with mortgage payments.

The Department for Work and Pensions currently pays 400 million pounds ($625 million) a year to welfare recipients under its Support for Mortgage Interest program. It’s paid at 3.63 percent, regardless of the loan rate, on as much as 200,000 pounds of debt.

Welfare Reform Minister David Freud said today he was looking at whether new claimants, who go on to take the money for long periods, should have to agree to a charge against their property, to be paid when the home is sold.

“The current system of SMI payments does not encourage people to get on top of their own finances,” Freud said in an e-mailed statement. “It is also not sustainable. In the future this type of support must be fair and affordable so we are seeking views from experts and the wider public, including options for putting a charge on the homes of future claimants so when they sell up we can recoup some of the costs.”

--Editors: Patrick G. Henry, Simone Meier

To contact the reporter on this story: Robert Hutton in London at

To contact the editor responsible for this story: James Hertling at

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