On the other side – Benefit Capped tenants and affected landlords

by CARIDON LANDLORD SOLUTIONS

8:20 AM, 23rd March 2017
About 2 years ago

On the other side – Benefit Capped tenants and affected landlords

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On the other side – Benefit Capped tenants and affected landlords

Did anyone watch Dispatches: Benefit Families on Channel 4 on Monday Night?

The programme started off with single mother Karen, with 5 young children living in a two bedroom council flat in Lewisham South East London, the benefit cap has affected her by £90.00 per week. This amount is taken from her Housing Benefit award and has made her incur arrears and at risk of homelessness.

The Benefit Cap is a limit on the total amount of certain benefits people of working age can get. If the overall income i.e Child Benefit, Income Support/JSA, Child Tax Credit income is above the set threshold, the Housing Benefit is reduced by that amount.

The Benefit Cap was introduced in 2013, meaning the maximum in benefits that a claimant could claim was £500 per week for single parents and couples (with or without children) and £350 per week for single people.

The Summer Budget 2015 announced changes to the level of the benefit cap meaning that households were no longer entitled to receive more than £20,000 in benefit nationally or £23,000 for those in London.

For single person with no children £13,400 nationally or £15,410 for those in London this was implemented from 7th November 2016.

At present 88,000 UK families are affected by the benefit cap and as a result of the Benefit Cap the Government has saved £155 million, despite insisting the Welfare Reform is not about saving money, but more about empowering people to get into work. Research has shown only 5% per cent of affected households moved into work under the old benefit cap, so is it really working or as Graeme Brom Chief Executive of Shelter stated “ Pushing families into poverty as the cap has no relationship to average earnings”

The programme then went on to follow the story of Samantha another single mother with 4 young children living in a three bedroom privately rented house in Croydon Surrey, she is capped by £166 per week which is deducted from her Housing benefit entitlement, again putting her into arrears. She was keen to work, but was finding it difficult to find an employer that was sympathetic and understanding of her circumstances.

Croydon Council have identified that 1000 households have less money as a result of the benefit cap and are working with tenants that are affected by the cap by offering them employment workshops and granting them with DHPs short term to pay their rent shortfall whilst they look for employment.

Interestingly, Mark Fowler Head of Welfare, stated that the average cost to Croydon Local Authority of evicting a family is £6000. He said families are also broken down resulting in some children being taken into care, this costs the Council between £16,000 to £40,000 per child, per annum.

A further study conducted by Policy and Practice has confirmed that 123 capped families have been placed into sodtly temporary accommodation within Croydon.

In Kettering Leeds the reporter went on to speak with single mum Abbi living in a two bedroom privately rented flat with her child under the age of two. Abbi was clearly struggling and in debt and regularly seeking assistance from a local voluntary organisation.

When the cap was introduced in 2013 only 225 people were affected in Leeds, this has now risen to 1000. The Chartered Institute of Housing have also identified that 11,600 families are now at risk of homelessness.

Although, the Government have given Local Authorities £185 million to ease the impact on Welfare Reform to date only £67.5 million has been used for the Benefit Cap.

Lord Kerslake Local Government Association stated that  “Central Government are merely moving costs to local Government”

As we are aware Landlords are now are refusing to rent properties to those on benefits due to many issues caused by the Welfare Reform causing an extra strain on Local Authorities who have a duty of care to accommodate those who present themselves as homeless with children often in temporary accommodation.

When I watched the programme, I couldn’t help  notice that all three women were single, therefore the primary careers of their young children, as they were on the breadline they openly said that they simply could not afford to pay their rent. The Government is insisting that they want people to be rewarded for working and the system to be fair, but really to me it does not seem fair to both the family and to the affected person; the Landlord.

There are very limited options available to the families affected by the Benefit Cap:

  • Downsize and be overcrowded
  • If they live in London to perhaps move out, but if they have over two children they would still be affected by the benefit cap
  • Lastly to seek employment, which for someone who has not worked for quite some time may lack confidence and may have child care difficulties.

One thing for sure is the people that are affected by the benefit cap are the most vulnerable and landlords who have tenants that are affected and unable to pay the rent.

I would be interested to hear others views.

Contact Sherrelle for offline Universal Credit advice

Sherrelle is an independent consultant and is recommended by Property118 for landlords who require professional advice and assistance in regards to dealing with Universal credit related matters


Comments

Dr Rosalind Beck

11:38 AM, 23rd March 2017
About 2 years ago

Hi Sherrelle. I think you will be very interested in this critique: https://speye.wordpress.com/2017/03/21/shelter-and-c4-dispatches-just-dont-get-the-benefit-cap/

Jonathan Clarke

12:07 PM, 23rd March 2017
About 2 years ago

Yes I saw it .. Its a desperate situation. Many of mine are going through similar pains. There are as you say very limited options. I`ve had downsizing conversations with my HB tenants. They can move estates but to move 100 miles north is just impractical and destroys their family structures .

All what is happening leads often to increased problems to do with health / drugs / drink / depression /crime ...... NHS / Education / Support services / Prison / Probation / Social services / Police etc costs then just climb and climb to deal with the fallout.

Its so shortsighted in my view .
The taxpayer will pick up the tab whichever statutory agency deals
They are just shifting the problem

I have social services highlighting to me about overcrowding concerns if they downsize . Council departments do not communicate or work effectively with each other . They openly voice thinly veiled criticism of each other to me and in my head I`m shouting you are all as bad as each other. Get your act together don`t moan to me.

The state is a piecemeal disjointed operation as far as its housing policy is concerned.
I simply cannot fathom their overall strategy. I understand they want to curb my profits but they are hitting the vulnerable tenants far harder. I can defend myself. They struggle to.

The autumn budget must surely see a loosening of the rope around me and my tenants necks.
If not then what is left of the system will simply crash and burn

Mick Roberts

14:57 PM, 23rd March 2017
About 2 years ago

Ooh don't get me started on the Benefit Cap>
One of my tenants on the next BBC1 Panorama programme & they should be using several statements from me.

Yes if someone did the maths, probably costs more to the overall budget, but like u say Big Govt looks good as little Govt picking up costs.

They want to cap the tenant, well they ain't 'cause they taking it out the Landlords Housing Benefit.

CARIDON LANDLORD SOLUTIONS

15:34 PM, 23rd March 2017
About 2 years ago

Reply to the comment left by "Dr Rosalind Beck" at "23/03/2017 - 11:38":

Dear Dr Rosalind

Thank you I will take a look.

David Griffith

17:56 PM, 23rd March 2017
About 2 years ago

I too saw the programme but am struggling to have any sympathy with the first example - Karen the mother of five kids in Lewisham who is refusing to pay her full rent and in danger of loosing a council property.

£23k pa = £442 pw. If she paid her rent of £112 she would still have £330 pw to live on. That does not seem unreasonable to me or am I missing something?

Michael Holmes

19:16 PM, 23rd March 2017
About 2 years ago

Nobody seems to question the sanity of people who keep having children they can 't afford to bring up, they always expect someone else to pick up the pieces. I am afraid I don't see why the taxpayer has to put up with this situation ad Infinitum. After three children, single mothers should be compelled to have the 'op' to ensure they can't have any more.

Rachel Hodge

22:54 PM, 23rd March 2017
About 2 years ago

Reply to the comment left by "Michael Holmes" at "23/03/2017 - 19:16":

Well, I think castration is a bit extreme, unless you mean castrate the absent fathers? If so, I'm all for it.

But I do agree that what is being ignored in the sob stories is that we live in a state where austerity prevails for almost a decade, and the welfare of the disabled and elderly is cut, and I'm supposed to care equally about un-working single mums with 3 or more kids?

No. The system has to change and although this is terribly hard on some families who've been used to living comfortably whilst having more children than I could ever dream to afford, they are going to have to now move to somewhere more affordable so that the family can stay together in a decent home, and we can free up some treasury/tax payers cash to take care of the elderly and infirm who couldn't go out and get a job to support themselves even if they wanted to.

Jonathan Clarke

15:37 PM, 24th March 2017
About 2 years ago

Family Planning I agree is very much part of the issue

My HB tenants in the old days talked openly of having another child purely to get a bigger house and more money from the state. Not very romantic. But stuck in a 3rd floor flat with two under 10`s they wanted a house with a garden

Having another child was their escape plan and gets them maybe a 3 bed house and a garden. So its early night time and 9 mths later they get a garden . Better LHA rate more child benefit etc etc . No one was there to stop them or discourage them. Their life management skills were often towards the lower end of the spectrum

Children were talked about as if they were a commodity in a supermarket.. The welfare system as it stood allowed this sense of entitlement to flourish unchecked

The welfare cuts will yes act as a natural suppressor to the sex drive but this will take some months / years to filter through to the masses.

So if the child has been born before LHA rates were frozen and before HB cuts were implemented then I don`t believe they should suffer if their mum hadnt got to grips with what the reality of this really means. Transitional relief should be there which is where I guess DHP comes in .

Word is rapidly getting around now and i bet the sale of condoms has seen a marked increase since HB caps came into force

The misplaced sense of entitlement which has existed for far too long will gradually change . But don`t make the children suffer just because they were born into a system where the State itself was very much a guilty accomplice in encouraging them to be born into this world

Rachel Hodge

18:45 PM, 24th March 2017
About 2 years ago

Well, unfortunately, there has to be a harsh and immediate change at some point, or there will be no change, and the Tories, who will be in power for a long time, will continue to try to balance the books by cutting welfare to the elderly, sick and infirm which is absolutely unacceptable.

Given the choice, I would rather attack the stay-at-home, generationally unemployed who are not charged with any responsibility for family planning, but rather, as you say, encouraged by the system to have more children to qualify for more benefits, than those for whom the welfare state was originally created to help. That is those who, through no fault of their own, landed on bad times. Who amongst us resents paying tax to help those people? No-one. Who amongst us resents paying taxes to support the work-shy, exponentially fertile long term benefit claimants? At the expense of those in society who genuinely deserve help? All of us. Well, except those who directly benefit from those claimants, Jonathan. No offence.

Jonathan Clarke

1:20 AM, 25th March 2017
About 2 years ago

Reply to the comment left by "Rachel Hodge" at "24/03/2017 - 18:45":

I don`t think the change had to be quite so harsh and immediate. It could have been staged in much smaller incremental reductions to allow both sides gradually to re adjust to lessen the social and financial impact.. They also needed an effective contingency plan to deal with the fallout and there just isn't one.

And yes I agree there are many who should be prioritised above the work shy. But by housing HB tenants yes I make money but so does the taxpayer by me taking that financial burden off them

The operation has been poorly handled by the government
Its counter productive in my view. Here`s why

Take a typical LHA 3 bed of mine
Market rent was 750 now 850.
I only collect 750 though and have done for the last few years
Its an unspoken agreement between me and the taxpayer
I`m doing nicely thank you so i wont be too greedy just maintain the status quo
But no . They change the rules
They chop to 400 pcm . A harsh and immediate change
That unspoken status quo has now been upset

I naturally section 21 and write a letter saying why
They throw in sweeteners for me to keep the tenant . Why
Because they are overwhelmed with sec 21`s and cant rehouse in the city
They have to outsource them 10 miles out of town
There simply is no where for them to go nearby
And the taxpayer pays their taxi fares to get them to and from school every day. Crazy

The council are cursing the government for mishandling it
So they get the sticking plasters out and pay me 4.8K arrears from DHP fund plus 850 rent in advance and 850 deposit
Thats a 6.5K loss to the taxpayer
Before that I saved the taxpayer 100 pcm
I would have continued to stand that lost but they kicked me so i reacted

So I in return for that 6.5K issue a 6 mths AST as a thank you
But what happens when that DHP runs out
They are just stalling for time
There is no way the tenant can make up the now 450 pcm gap so i will sec 21 again
Is the cycle repeated and they continue to pay me - which completely is defeating the object of the exercise ....Or this time they rehouse and a Working tenant comes in and I`m sorted once more

The taxpayer now saves 400 pcm by not paying me but the family has to live somewhere so the taxpayer picks up the far more expensive bill in a B&B or maybe a council house. The one they live in is worth 150K . I pay the mortgage but now the taxpayer will have to in effect buy that house at 150K and pick up that tab. The boiler goes and the taxpayer pays 2K to fix. I would have stood that cost before.

Before I was in effect the council house and the taxpayer subsidised me as a thank you. I made a profit but the taxpayer still saved It worked well for all concerned . But now the taxpayer will pick up the whole tab and the old and the sick will still suffer more
.
That 6.5K I gained could have gone to pay for their care

The government didn`t want that though. The taxpayer I agree would

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