15:32 PM, 4th January 2012, About 12 years ago 3
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:
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.