Caps to welfare payments that came into force this week will make 810,000 private rented homes unaffordable for tenants on housing benefit, it has been claimed.
Already, one local council in London has announced that it is planning how to help private tenants move out, if they can no longer afford to rent in the borough.
Research by the Chartered Institute of Housing for the Guardian newspaper has analysed the impact of caps to Local Housing Allowance, which is paid to housing benefit tenants in private rental accommodation.
It claims that 720,000 private rental homes in England will become unaffordable to housing benefit tenants, 60,000 in Scotland and 30,000 in Wales.
Tenants in London and the South-East will be hit hardest. A quarter of a million homes will become unaffordable in the region, says the CIH.
The new LHA caps restrict the maximum LHA payable to between £250 and £400 a week, depending on the number of bedrooms, with a top limit of four bedrooms.
The research also looked at the impact of setting LHA rates according to the lowest 30th percentile of local rents rather than the median 50%, which will be introduced from April. Effectively, this will mean that only one-third of private rental accommodation in any area will be available for LHA tenants.
Together, says the CIH research, the changes will mean there will be more families claiming benefit than available homes in some areas.
Private landlords have been under pressure to reduce their rents to the level of the new caps, in some cases in return for receiving LHA direct. For tenants whose landlords have decided against cutting rents, they have the choice – if they can afford it – of footing the difference themselves, or moving elsewhere to cheaper accommodation.
Grainia Long, interim chief executive of CIH, warned: “Welfare reforms will see for the first time more people chasing homes than the market currently provides.
“The only feasible option for many families who want to stay in their communities will be to borrow more or to spend less on essential items such as food.
“This could mean that more than 1.3 million private tenants face the New Year with dread, confronted with an uncomfortable prospect of homelessness or debt.
“Low income families could move to more affordable areas, creating benefit ghettoes and resulting in increased social disorder and a breakdown in community cohesion.”
Separately, Harrow Council is considering a housing report following months of consultation, including how to help residents move out of the area if they cannot afford local housing.
Portfolio holder for housing, Cllr Bob Currie, said: “We will be faced with residents who simply cannot afford to live in Harrow after all of the Government welfare benefit caps are enforced.
“We are planning now with our residents, tenants and leaseholders so that we are able to continue to protect and support our most vulnerable into the future.”
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Comments
“The only feasible option for many families who want to stay in their communities will be to borrow more or to spend less on essential items such as food."
...interesting that there's no mention of covering LHA shortfalls by other means (earning extra cash or giving up smoking / alcohol / gambling / fast foods etc.) Whilst I'm sure there are many LHA beneficiaries who use what income or benefits they do get responsibly there must also be many who do not.
Capping LHA is a step in the right direction along with the proposal to stop council tenants sub-letting their council homes (while we are at it we should also withdraw the right to purchase a council home at a discount if it has been sub-let). There are far too many hand-outs made in the UK, it's unhealthy, encourages benefit dependancy and, in many cases, benefit fraud.
At the end of the day we all have to cut our cloth according to our income or lack of it (LHA landlords included).
I love the way landlords suddenly defend socialism and develop a social conscience when housing benefit cuts threaten to unleash the free market onto their rents.
It doesn't matter if you rent to housing benefit claimants or not, the amount of money available in the rental market is about to drop and rents will come to reflect this. Welcome to market economics.
The CIH (a lobby group) assertion that there will be more people chasing fewer properties is laughable. Are you guys going to demolish your houses if you can't get the rents you want?
Most of these comments imply that all, or most landlords ONLY accept social housing payments, when actually alot ,dont. Landlords, like myself, prefer to rent to hard working people at the going rate, which in our area of Lincolnshire is one of the cheapest, so peopel who cant afford to get on the housing ladder...as yet, can still afford somewhere of their own or a couple to set up hoime together, or for a growing family to have more space. WE ALL NEED TO RUN A PROFITIBALE BUSINESS,or there is no point in having a business.So as far as i can see there is no difference from paying your mortgage to the bank than paying a landlord for your rent!! That must be better than livinjg with mum & dad all your life!!
I see nothing wrong with arguing for and agreeing with less state handouts which, by and large, has lost the plot. There is nothing wrong with arguing for affordable housing either. But some of the logics here are just .... well quantum leaps of ????
The subsidies dont go to 'greedy' landlords. They go to the 'lay abouts' some of whom have not worked for 3 generations. Landlords also have costs - the tenants pay the rent and the landlords pay the bankers.
Homes are to live in - of course they are. Thats the end use for the product. For sure they are not for the handout brigade to turn into ghettos.
Not speculative investment vehicle ????? What about 'hardworking people' investing for their pensions because the state is not providing for them ? The state is not providing for them because all the money has gone to too many handouts like housing benefits ? May be ?
Sustainable level ????? You have no idea how cheap UK housing is compared to some parts of the world - including developing countries.
Buying a house to let out does not have ............. Who is going to pay for building them if he is not going to make a couple of quid out of it ? Where are all these 'handout mentals' going to live ? What are all these workers who are now not building houses going to do ?
Get real guys. Money makes the world go round. No money, no housing.
The reason why housing in this country is so 'unaffordable' is because the government makes it so. Go talk to any 'filthy rich greedy developer' : 40% built floor area goes to 'affordable housing', 25% of land goes to 'open green space', £250k for the council to adopt a road (only if the road is up to standard). That leaves the developer less than 1/3 of the land to make his money. And do you know that the standard for 'affordable housing' is higher than private sector housing ? I havent even come to the GREENies and the NIMBYs yet.
How would you like to work and save all your life for a decent house in a decent area only to have 'affordable houses' built next to you stuffed full of 'handout mentals' who have not seen work for 3 generations ?
State handouts are bad for your health and wealth. It breeds a nation of whinging softies.
Housing is so expensive because so much of it is 'FREE' - just like the NHS.
And lets not kid ourselves :
hardworking people dont need 'handouts'.
this handout mentality has destroyed the pride that the Brits used to have.
@Common Sense -
As someone has already pointed out, calling those who argue for *less* state market interference a "socialist" is a prime-fillet of doublethink. Well done.
Common Sense, I don't really see what point you are making about shares. The reason that companies sell shares is to raise funds to pay for plant, stock and wages which allows them to produce products and services and ultimately profits. Of course, a company's primary responsibility is to its owners before its employees, but a responsible company will understand that it needs to keep the employees on-side if it wants to remain profitable. It's the capitalist system and when it is allowed to work properly, it benefits everyone.
Buying a house to let it out does not have the same net benefit to the larger economy because the landlord is taking the result of someone else productivity in return for somewhere to stay. In the case of a landlord renting to social tenants, they are taking the result of the productivity of millions of taxpayers. Thus, a lot of money is spent for very little in the way of product or service.
Err... Common Sense, don't really know what to say... you're calling people who think that rents and houses ought to be affordable 'socialists', whilst, presumably, defending high rents paid for by the state?
It makes me laugh when all these socialists post comments about houses are to live in, not to invest in. I think it shows a deep bitterness from someone who can't be bothered to try to succeed in the economy we live in.
How about shares? If you take the line they do, companies are to work in, not to invest in and buy shares. How about people who get made redundant because a corporation is more interested in their share price than Joe Smith paying his bills and providing for his family.
It's no different! Motivate yourself and stop whining.
I'm glad this has come in. For too long greedy landlords have been pushing up rents high knowing the tax payer will foot the bill. The country is broke, either we cut housing benefit to affordable levels or we start sacking teachers, police and nurses.
Rents will come down with this which is a good thing. Why should hard working people be priced out of London?
I have to agree with Renter, this is absolutely not about about making houses unaffordable.
House prices are excessive because of the outrageous generosity of the tax payer (like we ever had a choice!)
Rents have gone mental and this cap in LHA is the 1st of many steps to bring rents down, yields down and subsequently, house prices down to more sustainable levels.
Homes are to live in, they are not a speculative investment vehicle!
less affordable for benefit claimants leads to more affordable for hardworking families.
I love the way these "stories" imply that the landlords would rather knock down their house or leave it empty rather actually dropping rents (implication in the story is that the accomodation will be removed from supply). If landlords can't afford to drop the rent then they will have to sell up to someone who can afford to charge a cheaper rent (or better still, priced-out buyers).
Good to see that the housing market is moving slowly back towards the capitalist model of supply and demand, away from the current situation of government handouts for landlords, which effectively price out the local working population.
It doesn't make the properties unaffordable. It makes the rent unsustainable, and also reduces the government subsidy for landlords