As the number of tenants on Local Housing Allowance (LHA) residing in properties run by private landlords rises to an all time high, landlords are letting the Government and Local Authorities know that the situation could soon change as the changes in LHA loom ever closer.
New claimants shunned
Ever since the controversial cuts to LHA were first mooted by the architects of the Welfare Reform bill in 2010, landlords have been unhappy about the way the changes will affect their businesses. New claimants are already receiving less money for housing payments and there is evidence accumulating that property investors with private landlord insurance are turning their backs on custom from these people.
Fallout from the changes will be dramatic
In January 2012 the new LHA payments will come into force for those already drawing the benefit and this is the time that the blue touch paper on the housing fuse may well and truly be lit. At the moment 35% of tenants in the private sector are claiming benefits, the demand from this sector will probably grow when Social Housing Groups are allowed to claim 80% of the local rental rate and therefore put the properties beyond the purse of some tenants. These people will be forced to look elsewhere for cheaper accommodation, but private landlords are not playing ball.
Survey shows landlords will take action
In a recent survey 15% of private landlords have stated that they no longer offer tenancies to LHA claimants, 25% say they are already looking at replacing benefit claiming tenants with those from other sectors and 33% of landlords interviewed said they would probably look to lessen the number of LHA tenants in their properties once the cuts were in place.
Landlords will resist pressure
Of course it is true that even cheap property insurance for landlords will give them the chance to get cover for loss of rent amongst many other things, but landlords are afraid that local authorities as well as tenants will put pressure on them to reduce their rental demands in line with the cut in benefits. There is certainly evidence that this will happen as already some MPs are suggesting that landlords have been greedy in their demands, however, the Government have not helped their case by refusing to allow private landlords to claim their rents directly from Local Authorities who make LHA payments and they may regret not listening to the representatives of landlords when they had the chance.