Landlords quitting LHA sector after benefit cuts

Tuesday 24th April 2012

More than half of landlords can no longer afford to rent to housing benefit tenants because of cuts to allowances, with seven in ten saying they will not have housing benefit tenants in three years’ time.
 
The claim has come from the National Landlords Association after it surveyed its members.

The survey showed that 53% of landlords believe Local Housing Allowance cuts have made it unaffordable for them to rent to those on benefits.
 
Nearly half of landlords (46.9%) believe tenants aged under 35 will be hit hardest by the changes and almost 69% of landlords say they can’t see themselves letting to LHA tenants in 2015.
 
The LHA cuts have seen maximum rent benefit payments reduced to the 30th percentile of local average market rents rather than the previous 50th percentile. 
 
The age at which a tenant on benefits qualifies for any more than a single room in a shared house has also been raised from 25 to 35, forcing many more people into shared accommodation.
 
David Salusbury, NLA chairman, said: “It’s concerning that so many landlords appear to be planning to withdraw from the LHA market within just three years, as they can no longer afford to let their properties to tenants at the reduced benefit rate.
 
“In view of the pressures on housing, the private rented sector will inevitably play an increasingly important role in providing housing to LHA tenants, particularly those aged under 35, who aren’t able to access other housing.
 
“It is vital that local authorities work with landlords to provide the support services needed to help this demographic, as many are forced to move into shared accommodation.”

The NLA also reported that three-quarters of its members have not been approached by councils about reducing rents in return for direct payment of LHA.

The survey shows that just 25% of landlords have been approached by their local authority to reduce rents.

David Cameron drew criticism earlier this year when he claimed in the Commons that  rents were falling as a result of the welfare reforms.

Landlords who voluntarily drop their rents can do so in return for direct payments of LHA.

Salusbury said: “They have the discretion to make LHA payments direct to housing providers, but our research shows that only 25% of local authorities are currently speaking with landlords.”