There are rising concerns from landlords as the benefit system is undergoing massive changes which could mean that many tenants could soon fall into rental arrears. Landlords that do not have a rent guarantee policy as part of their landlord insurance are concerned that they will end up having to pay for mortgages on their properties out of their profits, or embark on the lengthy process of eviction.
Today it was announced that benefits are to be capped with an annual rise of just one per cent over the next three years. This is causing concern as rent prices for both private and council accommodations are set to rise, such as in the Selby area in North Yorkshire where council rent prices are increasing by 4.6% up to £79.90 per week so that they are now in line with housing association prices.
Councillor Mark Crane, leader of Selby District Council said: “Whilst I have concerns about the national policy which dictates rent levels we can set, it’s important to remember that an average rent of under £80 a week still represents extremely good value for money and is considerably below the level of private sector rented accommodation, ensuring that we are able to offer suitable housing to those most in need.”
The fact that housing benefits are set to be capped means that more private rented landlords are becoming reluctant to rent their properties to those that receive housing benefits. Furthermore, the introduction of the Universal Credit scheme – where various benefits are now paid to recipients in one lump sum – is also causing concerns. Previously, housing benefit payments were paid directly to a tenant’s landlord, but now tenants have the responsibility to pay themselves, and if they are not good at budgeting this could mean that landlords will find themselves out of pocket.