David Lawrenson Blog...

Newham Council is looking into sending families to other parts of the country because it says it cannot house them in the borough.

But this issue would not arise if the Government made Local Housing Allowance work better. And Newham is making matters worse locally because of its proposed local licensing scheme for all landlords.

The LHA rate is set at the 30% percentile of local rents, so three out of 10 properties in any area should, by definition, be available. Indeed, a quick look at Rightmove and we can see lots of properties are on the market to let in Newham at cheap rents.

But the real issue is that these homes are not readily available to LHA-dependent applicants. This fact and the reasons for it appear to have been missed by the Mayor of Newham, Sir Robin Wales, Newham Council and much of the media.

There are six reasons why landlords are often reluctant to let to tenants who are on LHA:

When letting to tenants who depend on LHA, assuming the LHA can be paid direct to landlord (which is not always the case following Labour’s 2008 changes to the system) the payments are nearly always made in arrears, unlike non-LHA lettings where they are always paid in advance. This is obviously worse for the cash flow of landlords.
Tenants on LHA don’t usually have a deposit they can hand over to the landlord to protect. And even where local government can help with a deposit, as is the case in Newham, the landlords often tell us that the deposit schemes are cumbersome, slow to administer and claim against in the event of damages caused by tenants.
Buildings and contents insurance premiums are often higher where a landlord lets to people dependent on LHA. Sometimes insurance is refused altogether.
Some buy-to-let mortgage loan terms and conditions do not allow landlords to let to people on benefits such as LHA.
LHA admin is slow, cumbersome and involves lots of form filling. Payments can start and stop without notice and the council can even try to claw back from the landlord past payments, if it later emerged that the tenant was claiming fraudulently.
Some landlords (a minority) think that LHA tenants are more likely to be non-payers or to not look after properties properly.

In London, where there is a large market of tenants who are not dependent on LHA, private landlords are simply avoiding LHA lets in increasing numbers.

To make matters worse, Newham local authority may have scared off potential landlords by their proposed landlord licensing scheme which is predicated on the belief that licensing ALL landlords will somehow help stop anti-social behaviour by a minority of tenants.

But I am not aware of any decent landlords who actually want to keep an anti-social tenant.

Instead of licensing all landlords, Newham should use their existing powers to shut down the minority of rogue landlords and prosecute anti-social tenants rather than set up an expensive scheme for all good landlords which will not work because the rogue landlords will simply ignore it anyway.

Central government must look again at how LHA works. Reinstating giving all tenants the option to have LHA paid direct to landlords would be a good place to start.

Extension of a Newham style licensing scheme for all landlords in London as proposed by some of London’s mayoral candidates will not solve the problems caused by rogue landlords or antisocial tenants.

David Lawrenson is a consultant on the private rented sector and author of ‘Successful Property Letting’, the UK’s highest selling property book.