Lowered Benefit cap could affect landlords from 8th May?

Lowered Benefit cap could affect landlords from 8th May?

11:04 AM, 13th April 2015, About 8 years ago 159

Text Size

If nothing is changed post election on the 8th of May the Benefit cap will be reduced from £500 to £440 pw in London with a lower cap in other regions of £396, 90% of the London figure.

As an example: A two parent household with three children receive £334 per week and then deduct the welfare benefit and child tax credit income to leave a maximum residual HB or LHA payable.  From the new cap figures this leaves a maximum of £62 per week in housing benefit outside the capital and £106 per week in London.

The question is will landlords risk renting their investments to benefit families who will only receive £275 per calendar month in HB or LHA towards the rent on a three-bed property? Or to a single parent with three children who will only receive £456 per month in HB to pay for a three-bed property in an area such as Liverpool with a typical three-bed private rent of £525 per month?

The last two years has seen some social landlords refuse to tenant a property with those under occupying due to the bedroom tax. Now landlords could face a greater financial risk, even on fully occupied properties, and so some may be forced to stop providing property to such households. Thus creating even greater pressure on council supplied social housing.

Mick Robertsbenefit cap

Share This Article


Neil Robb

9:07 AM, 14th May 2015, About 8 years ago

As I have said before the government and councils know they can not provide houses to tenants for the cost they expect private landlords to rent at. The cost of buying / building maintaining the properties. The government / councils could not do this for under five hundred pounds a month. Most new build HA houses are cost more to rent than private rental.

Now they want to reduce the amount of rent a private landlord needs to make it work being a BTL.

This is going to back fire in so many ways. Single people under 35 only get £42.00 a week where I am.

Putting them in a B and B costs over a £100 a week so where is the logic.

One bad tenant can cost a landlord thousands in a matter of months by wrecking the house and not paying rent. We constantly hear of these stories.

So why when the government need us do they do everything to stitch us up. And make legislation increasing costs.

Only landlords that bought a very low prices years ago will be able to keep going.

Plus all these high rents are in London and surrounding areas.

Robert M

9:27 AM, 14th May 2015, About 8 years ago

Reply to the comment left by "Simon " at "14/05/2015 - 08:19":

We have them already, (tent communities within cities), they are just off the radar and unseen by 99.999999% of the population. I know, I have housed several people that have been forced to live in tents because they did not qualify for social housing and other private landlords would not accept them. We already have lots of people living in tents, derelict buildings, cars, and even in rubbish bins (the big communal type of course), as well as the incredibly common "sofa-surfing". Okay, it's not one big tented city, so it's not obvious, but across the country there are enough people living like this to form a small city if they all came together in one place. Sure, some of them are their through their own actions and lifestyle choices, but many are there because they cannot get the help they need and unable to cope without such help. I have these people referred to me every day, but I can only house a fraction of them, and there are very very few other landlords that are willing to help these people, - I understand that, they are all incredibly high risk, and often it ends up failing and costing me lots of money, but I cannot just sit back and refuse to give people a chance to change their lives, and having a place to call "home" is the starting point for them to make those changes. I've had lots that fail to make the changes, but I've also had lots who have changed their lives, and this has a positive knock on effect for those around them and for society as a whole.

Si G

9:45 AM, 14th May 2015, About 8 years ago

I'm surprised I thought there was almost no homelessness in this country, all the more reason to stop selling what's left of the council homes and set up some border controls sorry to state the obvious solution, if that is done then in thirty years time we may get back to that point in 1981 when we had sufficient suitable social housing and manageable migration, but sadly history tends to repeat itself.

Robert M

9:50 AM, 14th May 2015, About 8 years ago

Reply to the comment left by "Neil Robb" at "14/05/2015 - 09:07":

Hi Neil

I've worked in local government housing departments (forgive me!!!!), and I know that the Council housing did not make a loss, it was profitable, because of course it was taxpayers money that paid to build them in the first place, so of course then renting out the housing was very profitable, but even taking into account the original build cost, spread out over the decades the rental income more than paid back the cost of the build, maintenance, and management of those properties. So social housing can work. Councils can provide social housing that pays for itself over time and then becomes profitable. The problem was that when the Right to Buy was introduced, all the best houses were bought for very little (and many later sold for big profit), and this depleted the housing stock, but at the same time the government stopped local authorities from building houses to replace replace the ones being sold off on the cheap. This left the Councils with the worst properties, and insufficient properties to meet demand, so costs increased as did the length of the waiting lists. It also resulted in much higher demand for private rented properties (as well as the surge in first time buyers) and this pushed up house prices and made renting much more expensive. This in turn pushed up the Housing Benefit rates, because landlords needed a higher rental income to cover their ever increasing costs. Of course now, the government blames private landlords for the increased Housing Benefit, when in reality it was their own Right to Buy policy that was the major cause of the problem in the first place.

Those landlords that are calling for cuts to the benefit cap are in effect calling for cuts to Housing Benefit (and perhaps their own livelihoods), as it is this rent element that will be cut first under Universal Credit, and this will result in higher rent arrears, increased evictions, and increased homelessness (with even higher costs to the taxpayer caused by this, e.g. as per your example of placing people in B&Bs).

The cuts to the benefit cap will affect people in other areas, not just in London. It has already affected some of my residents in the West Midlands and in South Yorkshire, and as it is cut further then it will affect many more people in many more areas.

Alan Loughlin

9:52 AM, 14th May 2015, About 8 years ago

strange then whenever they are shown they have fag in hand, and sky installed and a big big dog or two.

Si G

9:52 AM, 14th May 2015, About 8 years ago

Reply to the comment left by "Neil Robb" at "14/05/2015 - 09:07":

Hello Neil, sorry I don't understand something you mean if a tenant defaults on their rent payment or damages the landlords property then gets evicted they are put up at taxpayers expense in a b+b ? surely if this continues they lose the right to any housing assistance, is there not a three strikes and you are out fall back position ? As a taxpayer I object to this waste of money, a cap clearly needs to be set for ALL accommodation problem solved.

Alan Loughlin

9:58 AM, 14th May 2015, About 8 years ago

taxpayers money is not being spent intelligently, a much tighter regime is needed, this money is provided by hardworking people who are the backbone of this country, and it is an insult to them to see non-working people living in houses they could not hope to afford, we are effectively giving privileges to non-working at the expense of the workers, just not fair.

Luke P

10:08 AM, 14th May 2015, About 8 years ago


I am not against the act of compassion. Indeed on a daily basis I too assist people with their benefit claims and those that are vulnerable (free of charge) -that I am not against, but it is the system we are both helping them, on to that cannot be sustained. Your comments about Hitler are a completely typical liberal response, as though there are two choices -being a good samaritan or being Hitler-esque. There is an awful lot of middle ground and I know it's hard to ask tough questions and a new system may involve difficult decisions, even forcing some people back into work (or leaving them with no help). This does not make me, the people, the state, the system in any way similar to any Third Reich nonsense. Do not confuse the disabled with the lazy/idle/feckless. I'm all for helping the genuinely disabled -this is exactly what a welfare state should be for.

In the absence of any better solutions, just merely saying we should support people etc. etc. is not helpful. What does that even mean? Support will cost money and a lot of people who are long-term claimants are beyond the help of ANY support. They need tough actions with immediate noticeable consequences.

Ideally, yes, we would/should have more council housing and more appropriate council housing but I am talking reality. This will not materialise. So, with what we have here and now, with the little money we have, with the many, many benefit claimants, what other solution could there possibly be other than a hardline approach? All the other viable alternatives so far have been explored and failed.

As for London -that has its own separate economy. Everything costs more. If London wants its streets cleaning, it will have to pay the premium (and not just fall back on the minimum wage excuse).

I'd go for a three strikes rule...but we have to stick to it. If you have exhausted all your assistance opportunities, then you are 'out on your ear' and have to look inwards to solve the problem. I've long said that if a tenant spends their HB and subsequently makes themselves homeless, the LA should refuse to house them. A neighbouring LA could and if the same happens there, they have to move further again. Lessons would soon be learned.

The truth is, the status quo cannot continue. Until we get the house in order, we won't be able to extend the arm of charity/assistance/welfare.

Luke P

10:16 AM, 14th May 2015, About 8 years ago

Why is it we feel the need to have ANY welfare beyond say the disabled? Why should someone who does not work and therefore does not earn be given/expect money?

If I could stand face-to-face with the person who's benefits are paid with my taxes and they were sat around all day, I would threaten to do the same, telling them that if they're not going to out to work then neither am I. If I don't work, I don't get paid, don't pay any tax and therefore THEY don't get any money. The benefit claimant would be shouting and screaming at you to get out of the door and on your way to you place of work.

Perhaps there's mileage in this...every working person or family adopts a non-working person or family and teaches them the values of money/life/the way the welfare stem works. It's very easy to just discount it all as going into one big pot, but in reality all three of us that work in my office do not pay enough income tax in one month to cover one month's HB I receive for a 2 child household (not counting the numerous other benefits they'll likely receive) -at the most basic level, this can't be sustained and is effectively a pyramid scheme!

Robert M

10:27 AM, 14th May 2015, About 8 years ago

Reply to the comment left by "Alan Loughlin" at "14/05/2015 - 09:58":

I would agree that this would be unfair, if your statements were actually correct. I can only assume that you are not aware that "hard working people" on a low income can also get welfare benefits such as Housing Benefit, Council Tax Support, and Child Tax Credits, as well as Working Tax Credit, that in total will mean they are better off than the unemployed, and thus they CAN afford to live in the same (or better) standard of housing as the non-working. This is something the media tends to deliberately overlook, so as to give the more sensational/newsworthy image (stereotype) that everyone on benefits are lazy scroungers.

The process of focusing on a few people and portraying them as being the many, is called demonisation, and it is the process the Nazis used to turn people against the Jews/disabled/gypsies/homosexuals, and indeed they used the same sort of arguments, e.g. these people were a financial (and/or moral) drain on society. This distortion is very powerful propaganda, it can be very believable, particularly to those that are insulated from meeting these people personally and thus knowing that this is untrue.

The vast majority of benefit claimants are in fact OAPs and low paid workers (not the unemployed). Many people are working hard for little money and have zero hour contracts or part-time jobs, and these hard working people will be severely affected by the benefit cap, particularly if they have children.

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership


Don't have an account? Sign Up

Landlord Tax Planning Book Now