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Landlords forced out of housing benefit market

Published 14/06/2011

News Sourced by Property118 News Team

NLA logo colourAs MPs debated the Welfare Reform Bill at report stage on Monday, 13 June, a survey by the National Landlords Association (NLA) had already revealed that more than half of private residential landlords are planning to reduce the number of properties they let to tenants on housing benefits.

Around 450,000 homes are let to tenants on housing benefit but more than half (58%) of the landlords questioned said they would have to cut the number of properties they let to tenants paid housing benefits, with 90% planning to do so in the next 18 months and one third stating they would do so immediately.

One of the main concerns highlighted was about the reduction of Local Housing Allowance (LHA) rates from the average market rent to the bottom 30%.  This concern was shared by more than 80% of landlords with the same number also worried about future LHA increases being linked to the Consumer Price Index (CPI) rather than true market rents.  CPI is running about 1% lower than the retail price index (RPI), which takes housing costs in to consideration.

With the large majority of landlords facing mortgage repayments and rising running costs, as many as 90% revealed that they simply cannot afford to reduce their rents to absorb the changes to LHA.

David Salusbury, Chairman of the National Landlords Association, commented:

“These findings by the National Landlords Association are concerning as they indicate that cuts to LHA benefits are forcing landlords out of this part of the rental market.

“The private rented sector is playing an increasingly important role in providing accommodation to housing benefit recipients in the UK.  The Government is implementing cuts which, this survey tells us, is likely to lead to an increasing number of people struggling to pay their rent.

“The NLA believes there is a risk that the Government’s policies will result in fewer affordable rental properties available to vulnerable families across the UK, especially as the number of people claiming benefits continues to rise.  Benefit payments must ensure that LHA tenants are not left at risk and that landlords providing this much-needed housing can cover their costs.”

The concerns over housing benefit changes come at the same time as the government proposes to scrap payments that let single adults rent their own self-contained flats.

Instead, they will receive a payment that covers a room in a shared house. This is measure is predicted to push 88,000 more tenants in to looking for accommodation in shared houses.

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5 Comments »

  • http://www.forbesproperty.co.uk louis m forbes

    MARK

    I RUN A PORTFOLIO OF 30 PROPS FOR MYSELF AND 150 FOR OTHER LANDLORDS WE ARE ALL OF THE SAME OPINION BECAUSE OF BEING PAID A MONTH IN ARREARS AND WAITING UP TO 6 WEEKS FOR YOUR FIRST PAYMENT .AND THE FACT OF A VERY BOUYANT RENTAL MARKET IT IS INSANE TO RENT TO DHSS

    Like or Dislike: Thumb up 2 Thumb down 1

  • Graeme

    I note your comment about the government wanting to scrap payments to single people in self-contained flats/houses – they will only contribute to a room in a shared property ie:- an HMO.

    This is utterly crazy. LHA is supposed to be there to support people when they lose their jobs and at least buffer them while they are looking for a new job. In this situation you are instantly putting tenants into a situation that if they lose their jobs they have to move house – very stressful and upsetting – when they should be concentrating on finding a new job. many people are only out of a job for a short time and therefore shouldn’t have to move through no fault of their own.

    Landlords, particularly of smaller properties, will refuse to rent to single people, because they won’t want the constant concern that they will lose their tenant and the voids/financial losses that will cause if a tenant suddenly has to move because he/she has lost their job.

    It is also possible that if a tenant has to move unexpectedly, that it will be in breach of the terms of their AST. How do the government plan to deal with that?

    If any such plan was to materialise there should be a minimum timescale of , say, 6 months before a tenant was forced to move due to LHA being terminated.

    This is a brilliant plan if you want to destabilize the housing market and increase homelessness further.

    Like or Dislike: Thumb up 2 Thumb down 0

    • http://www.property118.com AUTHOR PROFILE – Mark Alexander

      I do understand your point Greame, however, why is this any different to a first time buyer losing their job. First time buyers are advised to purchase sickness, accident and redundency insurance. Maybe renters should do the same? From a landlords perspective it makes sense to ask for guarantors who are home-owners and in work too. If you were providing a guarantee for a friend or relative, would you want them to purchase such insurance? If they can’t afford it maybe they should consider renting a cheaper property. There’s no point anybody living beyond their means.

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  • Graeme

    Point taken, Mark.

    The vien of my comment was veruy much based on the thread of the article which was essentially geared towards tenants, and therefore landlords. However, I concede the validity of your reply.

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  • Graeme

    Point taken, Mark.

    The vein of my comment was very much based on the thread of the article which was essentially geared towards tenants, and therefore landlords. However, I concede the validity of your reply.

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