11:48 AM, 2nd February 2011, About 13 years ago
Buy to let landlords are on a collision course with the government as most are determined to defy pleas to reduce their rents in line with proposed cuts for tenants on benefits.
Local housing allowance – paid to tenants on benefits to help with the costs of renting a home – will be cut to around 85% of the local average rent for a private home from April.
The government expects landlords to reduce rents in line with the cut – and will offer to pay the benefit direct to property investors who agree a discount.
Almost nine in ten landlords (88.3%) have stated they will not reduce their rents to claimants, in survey results released by the British Property Federation.
This flies in the face of government’s key argument in favour of the changes – that landlords would reduce their rents in line with housing benefit cuts – and suggests that the high demand for homes in many areas will simply prompt landlords to instead let their properties to paying tenants.
A massive number of landlords (85.6%) said that they would not reduce rents to retain existing housing benefit tenants and that almost half (43.4%) planned to reduce the number of properties let to claimants against just 8.3% who planned an increase.
Government is letting landlords suffer huge debts
Since the removal of direct housing benefit payment to landlords in 2008, tenants have failed to pass on millions of pounds in rent, prompting more and more landlords to consider leaving the sector.
The figures underline fears articulated by politicians that the cuts would force many households claiming housing benefit to move in to cheaper, poor-quality housing.
Ian Fletcher, director of policy for the British Property Federation, said: “Most landlords want to ensure tenants on benefits remain housed, but our figures bear out that many respectable landlords look set to exit the benefit market.
“Such an exodus would be a tragedy, with more and more claimants forced into a few concentrated areas of sub-standard accommodation. Government should be seeking to work with the private rented sector to stop this happening.
“Paying your way in the world is one of the values that goes to the heart of this coalition Government, yet when it comes to landlords the Government seems prepared to let people on housing benefit get away with living in accommodation rent-free and landlords suffering huge debts.”
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