Benefit Cuts Price Poor Families Out of Buy to Let

by Property118.com News Team

15:32 PM, 4th January 2012
About 9 years ago

Benefit Cuts Price Poor Families Out of Buy to Let

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Benefit Cuts Price Poor Families Out of Buy to Let

Rents of around a third of private rented homes in Britain are beyond the financial reach of the poorest families as government welfare cuts start to bite.

More than 800,000 buy to let homes are now too expensive for housing benefit claimants and many face a stark choice – cut living costs to pay rents or try to find a cheaper home, says research published by the Chartered Institute of Housing (CIH).

From January 1, 2012, the government has capped housing benefit payments to the average rent in the area based on the cheapest third of homes and absolute limits based on the number of bedrooms.

The CIH reckons poor families are now excluded from:

  • 720,000 homes in England, including 250,000 in London and the South East
  • 60,000 homes in Scotland
  • 30,000 homes in Wales

The findings also suggest that demand for letting the cheapest properties will outstrip supply in many towns and cities – especially London, Edinburgh and Cardiff.

Grainia Long, the CIH chief executive, said: “These findings are astonishing. Welfare reforms will see for the first time more people chasing homes than the market currently provides. The only feasible option for many families who want to stay in their communities will be to borrow more or to spend less on essential items such as food.

“This could mean that more than 1.3 million private tenants face the New Year with dread, confronted with an uncomfortable prospect of homelessness or debt. Low income families could move to more affordable areas, creating benefit ghettoes, and resulting in increased social disorder and a breakdown in community cohesion.”

The latest government estimates put the number of buy to let properties in England at around 3 million.

The CIH fears the benefit change will spark an exodus from areas with better paid jobs where landlords charge higher rents to cheaper housing in places with employers paying lower wages.



Comments

2:27 AM, 5th January 2012
About 9 years ago

I see nothing wrong with this.
The only reason LHA claimants can afford to live where they live are benefits.
Reduce those and they will be like everybody who WORKS who have to live where they can afford.
That is how it should be.
For far too long the benefit system has allowed people who choose not to work for a variety of reasons have been able to make financial decisions based on a completely artificial situation of benefits.
Did anyone see the LHA  tenant who had a house in Maida Vale saying the £2000.00 rent per week that was being paid by the council might mean he will have to leave the community as it was being reduced!!
£104000.00 to keep him in his ' community' per year along with ALL the other benefits he receives.
I bet there are hundreds of thousands like him.
Time for them to go to other 'communities'.
Essentially learn to start talking northern.
That is where all the cheap property is.
It matters not there are no jobs there.
You haven't bothered getting one in the supposed rich south-east so it will save the govt a fortune moving you oop North,  won't it?

12:13 PM, 10th January 2012
About 9 years ago

I am always amazed when it is claimed that those on benefits will have to give up essentials like food or heating in order to pay their rent.

In the case of some of my tenants on housing benefits, maybe they will stop smoking or sell one of the wide screen televisions before they have to sacrifice the "essentials".

To me it is a simple equation.  If you can't afford where you want to live but you can afford something cheaper then that is where you go to live.  

Mark Alexander

14:57 PM, 11th January 2012
About 9 years ago

What are you testing?


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