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”.