Majority say practice is unfair and discourages return to work
A significant share of the UK’s working population sees the inclusion of state benefits as income in mortgage affordability checks as unfair, new research from Boon Brokers has shown.
The study, which focused on employed and self-employed respondents, found that 88% oppose the use of non-permanent disability living allowance (now PIP) as qualifying income in mortgage applications. Additionally, 81% of participants were unaware that benefits could be counted as income by lenders, with 78% describing the practice as unfair.
The research also revealed limited awareness around which benefits are factored into mortgage assessments. Boon Brokers noted that 81% of respondents lacked knowledge of the range of benefit types typically accepted by lenders. Among the most commonly included benefits are personal independence payments, attendance allowance, maternity allowance, universal credit, child benefit, and carer’s allowance.
Respondents were particularly unaware that disability living allowance (83%), maternity allowance (87%), and universal credit (84%) could be considered income in this context.
According to Boon Brokers, the absence of a specific Financial Conduct Authority (FCA) directive on this issue has left decisions about benefit inclusion up to individual lenders. The FCA does not take a position on which types of income may be included, but allows lenders to apply their own affordability criteria.
Three in four or 76% believe that accepting benefits as income discourages employment. The survey also indicated that 66% of respondents see a link between the use of benefits in affordability checks and rising property prices.
Boon Brokers highlighted that 88% of respondents opposed treating non-permanent disability benefits as income, the strongest objection across all benefit types. Many of these respondents appeared to differentiate between long-term earned income and short-term or fluctuating benefits when it comes to mortgage eligibility.
“It stands to reason that if people can function with benefit income and have the ability to purchase property with it, it creates a disincentive to return to the workplace,” remarked Gerard Boon (pictured), managing director at Boon Brokers. “This is clearly the overwhelming view from the general public.”
While the study acknowledges the complexity of the issue, particularly the link between benefit income and employment motivation, Boon Brokers said the findings suggest a broad consensus on the need for clearer guidance and regulation.
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