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NLA Fear Housing Benefit Tenants May Be Left With Nowhere To Go

Research from the NLA (National Landlords Association) claims that 54% of private landlords can no longer afford to rent a home to tenants who are in receipt of housing benefit. Due to the cuts to allowances, 70% claim they will not have any housing benefit tenants living in their properties that are covered with buy to let property insurance by 2015.

The research also showed that half of the landlords questioned believe Local Housing Allowance (LHA) cuts are making it unaffordable for them to rent to people on benefits, with tenants aged under 35 expected be hit the hardest by the changes. The LHA cuts have seen maximum rent benefit payments reduced to the 30th percentile of local average market rents rather than the previous 50th percentile. The age a tenant on benefits qualifies for more than a single room in a shared house has also been increased by ten years to 35 and this is forcing many into shared accommodation.

One member of the NLA said: “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 unless they get help from the government.”

The National Landlords Association has also reported that, despite the fact that any private landlord who drops their rent, voluntarily qualifying for direct payments of LHA, only 25% of their members have been approached by the local council about this.

Landlord Organisation Forecasts Housing Crisis for Benefit Claimants

A report from a major landlord association shows that tenants on benefits are struggling to find decent accommodation as Government cuts in Housing Allowance take effect.

The report issued by the National Landlords Association (NLA) shows that thousands of landlords are becoming ever more reluctant to let their properties to benefit claimants and are turning to tenants who are not on benefits to ensure they keep their business healthy. The survey of members showed that over 50% of the respondents said they no longer consider tenants on benefits because the cut in Local Housing Allowance meant that few could afford to pay the rent required by landlords and they were not prepared to be pressured by local authorities to bring their rents down. The outlook for benefit claiming under 35s is even worse. With the Government now only paying benefits based on the cost of renting a room in a house very few private landlords will now even think of letting a home to an unemployed young person. Although landlords can purchase cover for non payment of rent via their property insurance many now see benefit claimants as just too risky.

Chairman of the NLA, 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 Could Lose Under 25 Market if New Housing Policy is Introduced

Property investors with an interest in landlord insurance believe new Government proposals aimed at the jobless, could have a serious impact on the livelihood of many buy-to-let investors.

Provisions in the new Welfare Bill mean unemployed people under the age of 25 will have their housing benefit cut. Whereas before young unemployed people renting in the private sector received Local Housing Allowance (LHA) in accordance with their rent, they now only receive LHA to the equivalent cost of someone renting a room in a shared house. It has already caused problems for many tenants in the private sector and landlords have in some cases had no option but to evict people who cannot pay their rent.

However, things could actually get worse. A Government think tank is now considering a policy which would see single under 25s denied housing benefit completely, making them stay in the family home until they could fund their own housing.

Graham Kinnear, Managing Director at Landlord Assist, a company that provide a variety of services to the buy-to-let sector, believes that it would not only be tenants that would suffer if the new scheme is introduced. He said: “If the Government was to progress with this proposal it would force thousands of tenants into rent arrears, hit landlords financially if they don’t receive rent payments, and have a damaging impact on the buy-to-let industry as a whole. Furthermore, it will also deepen the housing shortage for the young as landlords and letting agents will be even less likely to accept anyone out of work who is under 25 as they will be unable to pay any rent at all.”

It is thought that any changes would take several years to be implemented but would certainly fit in with the present government’s policy of “making work pay”.

London Council paying tenants £2,000 a week

While the Coalition faces every increasing criticism over its plans to cap housing benefit, figures obtained under the Freedom of Information Act reveal that some local authorities in London are paying private tenants huge amounts.

Westminster is the most expensive borough in the United Kingdom and five families are currently receiving an allowance of £2,000 each week in housing benefit payments. The council who recently announced it is cutting 450 jobs in a bid to save £60 million is giving the five families over half a million per year. Elsewhere, private landlords with property insurance are housing tenants that are raking in staggering amounts of housing benefit. Under the current system which was introduced by the former Government there is no limit on payments but despite public support for the housing benefits cap introduced by the Coalition they have been forced to defend their plans against claims that a cap could see as many as 20,000 people losing their homes.

Andrew Lansley, the Health Secretary, said “We have to come back to a fundamental proposition, which is that the housing benefit bill was out of control, we absolutely had to make sure that it was no longer escalating. Lots of people who couldn’t afford to pay a rent of £26,000 were themselves contributing to this and nobody thought it was fair that people on benefits would live in properties having rent paid for them that were far in excess of the rents that were able to be paid in the properties that taxpayers themselves were living in.”

Grant Shapps, the Housing Minister, will also soon publish changes to the local authority guidance to make sure that recently arrived immigrants have their access to council benefit and housing benefit restricted and local residents who have to move home because of the cap are given greater priority.

Landlords asked to be sensible as benefit changes get closer

Landlords in Dundee are being advised to be realistic when setting the monthly rent for a tenant and some are being urged to think about reducing the rents as the changes in housing benefit are now just over six months away.

From January, single people who have no dependants will be losing their entitlement to rent for a one bedroom flat. They will instead be switched to the lower rate which is paid for a room in a shared property. According to the latest figures released from the Scottish Government a huge number of people will lose a considerable amount of their income when the changes take effect. Dundee Council believes that property owners with landlord insurance quotes need to speak to their tenants and hopefully come to a compromise.

Council housing officer Jimmy Black said: “This is a big hit for private landlords to take but I think they should consider carefully whether it makes sense to lose good tenants in the current market where there is a lot of private rented property available. I would appeal to landlords to be realistic and to consider whether it might make business sense to keep their tenants even if they are paying a lower rent.”

Other areas of Scotland simply will not have enough single room accommodation to meet the demand and the centre for homeless people in Dundee (Lily Walker Centre) is expecting a big increase in the number of people asking for help because they have lost their accommodation. Shelter Scotland claim that the 18 to 34-year-old age group will find it hard to get suitable accommodation in the coming years unless there is a re-think on the changes. The SFHA (Scottish Federation of Housing Associations) has also slammed the changes which are planned for two years time when two out of ten tenants will suffer a further drop in income.