ROOF Blog

Thousands of council tenants who make profits by illegally subletting their homes will face tough new measures to be announced by ministers this week. Subletting fraud is a civil offence punishable by a modest fine and the loss of tenancy. But John Housing Minister John Healey intends to make it a criminal offence so that the courts can recover the profits made. Those convicted could also face larger fines and prison sentences. Mr Healey estimates that up to 200,000 council tenants nationwide are illegally subletting their homes with many fraudulently claiming housing benefit at the same time, costing taxpayers tens of millions of pounds. He said that uncovering illegal subletting could free up at least 20,000 council homes if 10% of unlawful tenants were removed.

Millions of pounds of taxpayers’ money will be used to overpay mortgages after the Chancellor extended the Government’s mortgage rescue scheme for another six months at a fixed rate of 6.08 per cent. More than 200,000 people on certain benefits are covered by the scheme, which was set up to help families to avoid repossession. Industry figures suggest that about a third of homeowners are on standard variable rate and 15 per cent are on tracker deals. The average interest rates on these mortgages are only 4.1 per cent and 3.65 per cent respectively, well below the rate paid by the scheme.

Hundreds of out-of-work families who have been living in expensive homes at the taxpayers’ expense are facing eviction after changes to housing benefit announced yesterday. Alistair Darling said that from October next year the most expensive properties would be removed from the housing benefit calculation. Housing benefit, which can be as much as £1,800 a week, discouraged people from working and was unfair on those who accepted smaller, cheaper homes, he said. Housing benefit will be capped at £1,100 a week, meaning that 13,000 families, mostly in London, will have to move out of their current properties and into somewhere more modest.

The average cost of Band D council tax bills in England for 2010/11 is set to increase by the lowest percentage since the tax was introduced in 1993. The Chartered Institute of Public Finance and Accountancy (CIPFA) and local authorities predict rises of below 2%. A CIPFA survey suggests the average bill will be about £1,438.72.  CIPFA head of policy Ian Carruthers said although politicians had listened to calls to ‘avoid large increases’, financial pressures meant councils might still have to cut certain services.

People who generate electricity from home wind turbines and solar panels will not have to pay tax on the money they make by selling it to the national grid, the Chancellor announced in the pre-Budget report.

From April 2010, the £900 a year they typically make from electricity sales to the grid under so-called ‘feed-in tariffs’ will be tax-free. This will save a basic-rate taxpayer £180 a year and a higher-rate taxpayer £360 a year.

The government also announced that it would take steps to encourage poor households to generate their own electricity.

Although home generation equipment often pays for itself over its lifetime, the Treasury said, the initial costs can discourage low-income families from installing it.

MPs would be banned from receiving taxpayers’ money to pay the mortgage interest on their second homes, under proposals to be published next week.

Sir Christopher Kelly, the chairman of the Committee on Standards in Public Life, has briefed opposition party leaders about his report, which says that in future MPs will have to rent, not buy, their second home if they wish to receive taxpayer support.

Kelly is also to make it more difficult for MPs living in the south-east to claim for a second home, so more of them will have to commute to and from parliament.

It is possible he will rule that MPs living within a 60-minute commuting radius will not be able to claim for a second home, joining the small group of London MPs that are already banned from receiving a second home allowance.

Previously MPs could claim as much as £24,000 a year in mortgage interest payments on their second home, often allowing them to live in homes which were much larger than they required.