Crystal Horwood Blog

Friday 20th January 2012

Thousands of people across the country are affected by changes to housing benefit effective from January 1. In particular, I would like to focus this time around on the changes that affect single people under the age of 35.

Until the beginning of January, people aged from 25 to 35 were eligible for Local Housing Allowance to cover a one-bedroom flat or studio. Now, they will receive benefit capped at £250 – enough to cover just a room in a shared property.

I realise these changes have been on the cards since last year, but has anybody really considered what will happen to the people affected? I recently conducted an internet search for one-bedroom and studio properties in our area, Southend in Essex: there were only five properties available on Rightmove and three in the local paper in the new benefit price range – and that’s for an estimated 1,200 people!

Of course there will be other properties out there within the price range that are not advertised in the main channels, but what will they be like? Will they be up to the standards that are expected of rental properties?

 As landlords, how are we going to satisfy the needs of a greater number of people looking for affordable one-bedroom accommodation?

Planning permission is necessary to convert a property to an HMO and many councils are not in favour of higher density accommodation. Also, with the cost of the extra safety precautions required, it is not always economically viable. At PACE, we are investigating whether converting failing hotels, which already have suitable safety precautions, is one way to fill this gap in the market. 

Another issue is how we are going to deal with the shortfall in potential tenants for larger properties that these changes could cause. Rents in Southend have been fairly constant for the last few years and yields are still fairly healthy, but not so good as to support a drop in demand. The overall effect must surely be a downward pressure on rents.

A survey carried out by the National Landlords Association in October indicates that around 77% of landlords are considering reducing their involvement in the Local Housing Allowance market. If good, conscientious landlords step out of that sector, who will be left?

PS:A new report by the Chartered Institute of Housing estimates that 810,000 homes in total will now be out of reach of housing benefit claimants. The report talks of ‘benefit ghettos’ forming in some areas – including seaside towns. How will that affect Southend and other places like it around the country?

Crystal Horwood is a landlord and letting agent. She is managing director of Pace Property Specialists in Southend, Essex