Landlords drop housing benefit tenants as cuts bite

by Property118.com News Team

15:24 PM, 23rd April 2012
About 8 years ago

Landlords drop housing benefit tenants as cuts bite

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Landlords drop housing benefit tenants as cuts bite

Tenants on housing benefits are struggling to rent buy to let homes as landlords withdraw from the market.

The market is set to deteriorate further over the next three years as huge numbers of landlords say they will stop letting to tenants on benefits.

Demand from first time buyers and movers who cannot buy a home is cutting the number of rented homes available for benefit tenants as landlords switch non-benefit tenants, says the National Landlords Association (NLA).

A NLA survey has revealed more than half of landlords (53%) consider letting to benefit tenants is unaffordable after the government cut local housing allowances as part of a wider benefits review.

Around 47% of landlords believe tenants aged under 35 will be hit hardest by the changes and almost 69% of landlords say they unlikely to rent to tenants on benefits in 2015.

Councils have stopped paying benefits to single tenants under 35, forcing them to seek shared accommodation, while average rents paid have also dropped as well.

NLA chairman David Salusbury said: “It’s concerning that so many landlords appear to be planning to withdraw from the LHA market within just three years, as they can no longer afford to let their properties to tenants at the reduced benefit rate.

“In view of the pressures on housing, the private-rented sector will inevitably play an increasingly important role in providing housing to LHA tenants, particularly those aged under 35, who aren’t able to access other housing.

“It is vital that local authorities work with landlords to provide the support services needed to help this demographic, as many are forced to move into shared accommodation.”

Landlords can find out the likely rent a local council will pay on their property by inputting some details in to an official online calculator.



Comments

Ben Reeve-Lewis

19:04 PM, 23rd April 2012
About 8 years ago

This just makes me so angry. Not landlords walking away from LHA tenants it is a business after all, but a government who refuses to acknowledge the problems that exist.

I dont think for a minute that government is daft or blinkered. Far from it, they know exactly what will happen but they dont care how it affects tenants, landlrods or the PRS as a whole because the only thing they care about is homeownership as the holy grail of occupancy.

Shapps and Cameron deserve our contempt, not for being stupid but for not caring. Shapps keeps championing the rights of street homeless people to create a smokescreen for the fact that he knows his policies create more homelessness and misery in the PRS. He rejects any possible solutions to what is really going on in the rental sector because they dont fit the party line. Meanwhile landlords, tenants and people who work with them know what really needs to happen to generate growth and ensure that all parties needs are being met.

Stop this nonsense of LHA payments going direct to tenants.
Stop cuts to benefits that are making people homeless.
Allow lanldords to be treated as running a business with the correct breaks.
Stop treating landlords as sources of income generation.
Reverse the law that removes ring-fencing for supporting people budgets so that the money can be spent where it is intended, not side-lined to put flowers on roundabouts (as one London council has done)
Stop the attack on solar panel grants.
Support the regulation of letting agents to stop landlords and tenants getting ripped off by incompetent hucksters

john lown

18:32 PM, 23rd April 2012
About 8 years ago

Ben, excellent article. I would add that any government should build social housing, with the rent being paid direct to the owner, not the tenant.
The reason a large number of these tenants are in need of shepherding is beause they need guidance, possibly through lack of the economics of life not being taught at school.
Landlord - South Devon. 

Tony Atkins

19:56 PM, 23rd April 2012
About 8 years ago

I agree with a good part of the Government's housing benefit reforms: it does seem unfair that single people on benefit have been able to rent complete flats whilst most young working people, at least in the South-east and London, can only afford to live in houseshares. However, the reforms have completely ignored the question of supply, which is being damaged by other housing policies like Article 4 Directions. Where exactly is the shared housing meant to come from, to house these benefit claimants aged under 35? They are being forced into competition with relatively well-paid young graduates and students, and there is no sign of landlords increasing the number of HMOs to meet the increased demand. Perhaps councils like Oxford will come to regret their relentless attacks on HMO landlords, where Article 4 Directions, hefty fees and pernickerty EHOs only serve to encourage good landlords to abandon the sector in favour of easier-to-manage tenancies for single people and couples.

Ben Reeve-Lewis

20:15 PM, 23rd April 2012
About 8 years ago

Thanks for the input Tony. My personal vision to sort out this mess is that for a healthy PRS to flourish, that addresses all parties needs within it we need a system that addresses:-
What landlords need to run a succesful business.
What tenants need to feel safe and secure
What councils need in terms of property standards and legal compliance

Government goes nowhere near approaching these 3 factors. Its just about social engineering, that they usually only accuse socialist parties of doing

Mark Alexander

20:36 PM, 23rd April 2012
About 8 years ago

When do we start the "Vote BRL" campaign?

You have my vote Ben 🙂

Tony Atkins

0:32 AM, 24th April 2012
About 8 years ago

As an HMO landlord, I don't have a problem with 98% of my tenants. Of course every tenant wants more space, an ensuite bathroom, a cheaper rent, congenial housemates and a landlord who fixes all problems within 30 minutes of them occurring, but generally we rub along pretty well. The vast majority of HMO houses are perfectly ordinary houses that have been adapted for rental purposes with a mix of private bedrooms and shared living rooms, kitchens and bathrooms. They are not so different from a family house with live-in grown-up children, except for a few rules about gas safety, non-flammable furnishings and EPCs. From a small landlord's perspective, this makes an HMO fairly easy to set up, and just as importantly, easy to switch to a regular tenancy or sell on to a private homeowner when the time comes. The returns are poor if you have a mortgage, but at least it's an investment that covers its costs and has a chance of capital growth, and it's a form of small business that is pretty rare in this country, one where a normal employed individual has some chance of managing it for themselves in their free time, alongside their job, using their existing set of homeowning skills and experience, and without tangling with the nightmare of business taxation and employment law involved in other forms of small business.

However the way things are going, the notion of what constitutes "decent" housing is changing: more and more councils seem to have an animus against HMOs - they don't fit their nice tidy definitions of "family units" in affordable housing or private ownership or rentals, with a few special cases like student dormitories and hotels. Where I get scared is when councils start deciding for themselves - as they can now do even more under Localism - what counts as "high standards", "appropriate fees" and "too many" HMOs in a given area. I am scared of councillors courting the nimby vote or pursuing their own anti-landlord vendettas, because law-abiding landlords, like small businesses, are a soft target and easy to tax and blame for all sorts of societal ills. Landlords are also very easy to use as a platform for frustrated green agendas: the homeowning public can't be forced to upgrade their energy efficiency or display the correct right-on atttitudes, so let's target the evil exploiting landlords (what other kind is there?) instead.

6:04 AM, 24th April 2012
About 8 years ago

I think you will see continuing and ongoing attacks on all multi-let circumstances.
These are readily identifiable and are a great way for councils to think up all sorts of licencing and planning permission charges.
If I had mult-- let I would get out of that business and go to renting the property to single family units.
Take the hit on income as the charges that will be levied on the multi-let type won't make it worth the hassle for retaining it as a multi-let.
What tenants are looking for is long term stable properties.
They cannot afford to buy but need to put down roots for things like schools etc
I'd sell your HMO's and obtain as many family type 3 bed min properties.
Far less hassle and ultimately will bring more income as no voids, additional admin etc
Councils will be targeting these HMO type properties even more now as they can see they have hostages to fortune in the form of HMO LL.
Those fees they have just started charging WILL be increasing over the coming years.
It looks like it it will be back to B & B for single room occupants as I reckon more HMO LL will give up and convert to family dwellings or sell up and invest in......................B & B's!!!?
LHA for B & B is a lot more than an HMO isn't it!?
Unintended consequences or what!?
Up goes the councils' housing costs for TA.
You couldn't make it up could you!?

Ben Reeve-Lewis

6:44 AM, 24th April 2012
About 8 years ago

 That might solve the landlords problem but it doesnt address the whole system Paul and its systemic solutions I am on the look out for.

Thanks to the government's ridiculous extension of the Shared Accommodation Rate of Housing Benefit from those under 25 to those under 35 we need more shared accommodation than ever, not less.

Along with that need is the council's need to ensure that standards are decent and properties safe. The HMO market has always been very bad in that respect and even now so many HMO landlords are dodging licencing and getting fined for no gas safe, no carbon monoxide alarms, people's lives are at risk.

And what is going to happen to the PRS system if government do go ahead with their latest wheeze and withdraw housing benefit for the under 25s? Where are they going to live?

Personally I agree with HMO licensing but HMO world is a different animal from single renting and needs a much more hands on approach from landlords. I just think it should be with council assistance, advice and support. Grants would be nice but I'm not holding my breath. 

Enforcement teams like EHOs and TROs will always have that role but I think that they should be seen, and see themselves, as a resource for landlords. People who can jump in with mediation, practical solutions, and friendly advice. That to my mind is far more effective than waiting in the shadows to pounce when a problem comes to light.

As I keep banging on about, this is acheived through building relationships in the PRS community. Getting on first name terms. You guys with the teams and us with you. Far more can be done through a quiet word with Dave over a coffee in Starbucks than running around with an injunction, a large Latte is also far cheaper

8:23 AM, 24th April 2012
About 8 years ago

From this morning's announcement (I heard as on my car radio on the A14) it sounds like councils don't want these tenants either!
Or - could this possibly be the authorites (plural) way of sending out the message to landlords - - - don't price yourself out of the handout market or we won't do business with you. Well actually if Landlords don't want that market it will fall on deaf ears and be a fatal pincer manouver.

12:12 PM, 24th April 2012
About 8 years ago

I too am an HMO Landlord and over the years have done extended battle with unconcerned and incompetent local authorities.
I have no issue with the principle of licensing or the quite proper regime to ensure that the multi occupancy property is fit for purpose and that it is managed in a lawful and professional manner. However it is clear that, whist, shared accommodation is an essential part of the mix and rightfully should become more so as other home options reduce, local authorities and the legislative framework seems to be doing all it can to make such enterprises less profitable and consequently less attractive for Landlords.
Whilst local authorities have freedom to set the licence cost they should be mandated to do this on a work content basis rather than just pass on whatever costs they have accumulated. They have no incentive to do things better and seemingly no concept of the essential accommodation that HMO properties provide. I’ve rarely encountered more numskull organisations than Medway Unitary Authority.
They lose their records of inspection then seek to inspect again within the same licence period. They send me threatening letters accusing me of operating a multi occupancy property, promising draconian action when I have to reply and say ‘yes’, of course I am and you have already licensed it.
It pains me that I have to pay for this yet have no say as I live elsewhere. Yet another issue that landlord face in paying council tax but having no vote.
However, I digress, the main point being that housing policy and planning law (even less comprehensible) with regard to HMO properties is a mess deserving of a complete review and establishing a framework that encourages the private sector to continue providing rented accommodation because public money has run out.

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