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Almost a million private rented households reliant on Universal Credit experience a shortfall between the benefit payments they receive and the amount they pay in rent, says the National Residential Landlords Association.
In total, 1.5m households renting privately in Britain receive Universal Credit which includes support for their housing costs, known as the Local Housing Allowance . However, an analysis of government data by the NRLA suggests that of this group, two thirds have a shortfall between their LHA payment and their monthly rents.
As of next month, the LHA rate will once again be pegged to the lowest 30 per cent of rents in any given area.
This follows a freeze which was introduced in April 2020 which has caused benefit rates to be detached from market rents. According to the Institute for Fiscal Studies, it led to just five per cent of private rental properties being affordable for those relying on the LHA.
The Institute for Public Policy Research has warned that even when the LHA rate is unfrozen, over 800,000 households on Universal Credit will continue to face shortfalls between their housing support payment and the rents they pay. The picture is set to worsen given that LHA rates are due to be frozen again after April, leading to the rates becoming divorced from rent levels once again.
Ahead of tomorrow’s Budget, the NRLA is calling on all parties to provide certainty to renters and responsible landlords by ensuring housing benefit rates remain pegged to at least the lowest 30 per cent of rents throughout the next Parliament.
NRLA chief executive Ben Beadle says: “It is time to fix the broken housing benefit system once and for all. The repeated freezes of the support available and the lack of clarity about rates in the future is causing insecurity and anxiety for renters and landlords alike. It is making it impossible for anyone to plan for the future.
“All parties need to commit to ensuring housing benefit rates permanently track average rents. This would end the bizarre and morally absurd spectacle of the support available being completely detached from the cost of housing for renters.”
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The new rates are still miles below the cheapest available properties on Rightmove.
The following are the new figures for April. Cheapest available property on Rightmove within 5 mile radius of the main city in brackets.
One bed LHA £628 (£725)
Two bed LHA £792 (£850)
Three bed LHA £947 (£1000)
Four bed LHA £1296 (£1350)
So in all cases the new LHA is below the price of the cheapest available property. It certainly isn't anywhere close to the 30th percentile rent.
The main problem is the size of the BRMA. The very few houses that come in at LHA rates are 25 miles from where most people work.
Why must Budget fix Housing Benefit, one and a half million on universal credit included 800 thousand on local housing allowance Privately Renting, didn’t mention how many in Council Housing on Benefit so what’s the real figure. Why I never got a penny Benefit in all my life ever.
Just paying taxes to keep them I believe many are on it because its there and have the attitude its my right I am entitled.
I know some gave all their lives on it came down the line to the grand children now on it, it’s not healthy for them and can’t give it up and make their own way.
Of Course I have sympathy for people struggling and impoverished but they’ll never break the cycle with this system it’s like an addiction. Its a false industry false economy the system pays the Claimants the Claimants pays the Housing Benefit
Landlords the tax payers covers the lot it a right merry go around.
The new local housing allowance rates in inner London where my properties are located are high, I thought. There seems to have been a very significant increase in the rates.
I believe these are they:
1 bedroom £1436 per calendar month
2 bedroom £2147 per calendar month
3 bedroom £2583 per calendar month
4 bedroom £3051 per calendar month
Can anyone check that those figures are correct?
Ellie - if you're Central London it looks right. If you're one of the Inner London areas it may be slightly different depending which area and size of property.
The rates have increased quite a bit but they had been frozen for a very long time.
They're still low compared with market rent and some of the London ones have been set at the LHA cap rather than the 30th percentile. For example the 30th percentile for a 4 bed in Central London is £1150 a week. The new LHA rent is capped at £704 a week.
Thank you for that Jo.
The tenants I have had would not have been able to afford those amounts - and I would not have charged them that either.
London is expensive, but not everyone has high wages.
Ellie - that's the whole point of LHA and UC. So low paid workers can afford to live in areas they couldn't otherwise afford. There are all sorts of arguments about sending them to live somewhere cheaper but ultimately a lot of them are essential workers who get paid very little. The clue is in the word "essential". Pushing them miles from their workplace and expecting them to pay high travel to work costs is a complete non starter.
It's not a perfect system but no one has come up with a better alternative. Regional pay has been suggested but would be problematic. Whenever anyone trys to change anything someone starts screaming about child poverty.
It's largely up to us how much rent we choose to charge or the type of people we let to. I choose to do some LHA level rent for various random reasons. All 6 of those properties would rent for significantly more to other people. They wouldn't necessarily be much more profitable though by the time voids had been factored in.
You've previously mentioned a few things about the type of tenants you prefer. What you choose to charge them is up to you and as long as you don't feel exploited or taken advantage of then it's a win, win situation.
I do understand what you are saying, Jo, but my tenants have been visiting academics from overseas so not eligible for any benefits.
Michael I fully agree with you. Sadly in this country you get severely punished if you work hard. That’s why people prefer to live on benefits. And that’s why a steady stream of immigrants is needed to work and pay taxes. But once they get indefinite leave to remain and get fully integrated, they also develop the work shy syndrome and opt for life on benefits.
That’s the reality in modern Britain. Once someone starts getting benefits you could never wean him/her off those. Work pay less and the jobs are never 100% secure. Also why work full time if you could work few hours and get paid the rest in benefits.
In my day there was no housing benefit. You paid your rent out of what you earned. The only "benefit" was low rent for council houses.
Housing benefit normally ends up in the tenant's pocket, how many pass it on to landlords, it's just more free cash for them to spend
LHA needs to be paid direct to the Landlord so tenant can’t spend it.
I have 6 tenants on UC and LHA. All 6 pay me direct. I tried getting payment from DWP for one tenant about 3 years ago and it was a complete nightmare. Hopefully never again.
4 of my tenants pay on time and in full every month without exception. The 5th one pays 3 days after the due date and is a month in arrears (because of the 5 week wait when he first started claiming UC). The 6th one pays in installments. He gets paid fortnightly so finds it works best for him if he pays half a month's rent every fortnight. His UC payments are quite unstable because his pay is fortnightly, so some months have 2 pay days while others have 3 pay days. Sometimes he's a bit in arrears, sometimes a bit in advance.
DWP paying direct to the landlord would only work for unemployed tenants. Most UC claimants have at least a part time job. Very often their benefit top up is less than their rent.
Margaret, the problem with direct payment to the landlord is clawback. Given a choice between a landlord who has assets and a tenant who doesn't, who would you go for?
Paying to house social tenants in the PRS is unsustainable. Build more social housing, move these tenants out of the PRS & both the LHA bill & the cost of renting in the PRS will fall.
But are they social tenants?
Of my 6 UC tenants 2 came via the Council Housing Options scheme so I'll concede maybe they could be classed as social.
Another one didn't have enough priority to even get his name on the Council waiting list.
Another has been a homeowner twice with 2 ex wives. Divorce and age has left him as a PRS tenant.
Another one grew up in her parents mortgaged house and has been a PRS tenant since leaving home.
The final one grew up in a Council house but has lived in the PRS since leaving home at 16.
Is it really cheaper to house people in Social Housing or is it just subsidised from a different budget? Social rents clearly aren't sufficient to cover the maintenance and admin costs so they're being subsidised somehow.
No, budget needs to get people back to work and stop them being reliant on the state. I run a lettings agency and every day see people capable of work not working because getting benefits means that they are better off! It is not unusual to see people getting north of £2,000 a month for not working, disgraceful.
Yep, I see this also 🫣, in my role I meet these very savvy people, if we continue down this route we are falling down the rabbit 🐇 hole. It cannot be accepted that choosing NOT to work is an option.
The answer to sustaining tenancies is for tenants to engage in ‘work’. Increasing benefits simply encourages idleness. If we have to house those who won’t work, the PRS is not ever going to be appropriate or viable. Time to build more social housing, problem is there’s no money to build em! (and won’t be for decades)
Answer, ‘lock in the PRS’ which is what Gov is now doing. Leave now why you still can.
They should think they're lucky they get any money to help pay the rent. Hardworking homeowners don't get help. Not fair. I thing UBI is fair and cut out the benefit system, much simpler and cheaper to administer.
The NRLA has no voice and these platitudes will make no difference. This Government just ignores them,. Time for a proactive Association that actually represents professional landlords.
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