Housing benefit reforms: a huge gamble on rent cuts

I let one bedroom flats to non-housing benefit tenants in the South East and I get just over £400 per month. They are in nice easy commuting areas, maybe I don't charge top rates as I have had the same tenants for a while and they are reliable - but why is the goverment paying out so much more?

I would definitely agree that private landlords have hugely benefitted from outrageous amounts of rents paid to them - hopefully, the new measures will give them a chance for a reality check, but I doubt it. they have been getting paid huge sums of money & hopefully this will make both tenants & landlords wake up & smell the coffee.

Working people cannot afford to live in sort after areas, or to afford the larger properties - benefit claimants in this country take the mickey & now hopefully, they will be moved out of the homes to homes which are cheaper!

As for older people living in 3/4 b/room properties, & expect the cost of their rent to be paid by the taxpayers is also a daft way of spending public monies - just because you are old, does not mean we have to pander to them - they should move out of the bigger properties (especially from social housing) & enable families to live in them - but I doubt anything will be done about them because grey power rules & all the charities associated with the elderly have a lot of bargaining power, with Joan Bakewell in the lead!

Of course it will backfire; with the shortage of housing landlords are not likely to lower rents. All this silly, latest IDS measure will do is to create ghettos of poorer people as they move to cheaper areas and create more homeless families (those who cannot afford to move and are evicted). Once a fool, always a fool - and this man is in charge of so much.

I cannot afford to live in Westminster I work 60 hours a week so why let people who don't work, have that privilage on the tax I pay. I think £400 is still too much.

Lets start to change the old Labour policies and force people to work instead of claiming housing benefit. If people are not on incappacity benefit and not a pensioner then they should have a reduce housing benefit. Maybe they will then try and get a job that the people from Eastern Europe are so keen to move countries to do. May be they will also move country (those on housing benefit)

Two boot campers and 'bash the elderly' on this thread - luckily they can't spell and probably won't get far!

I just hope that when Rose G is old she doesn't get turfed out of her family home where she has lived all her life and raised a family with all the strong emotional ties to the place. Breaking those ties for elderly people often ends up breaking the people. You only have to see the damage that is done to the elderly when they are forced to leave a Care Home when they close, never mind a long term family home. You have to be old to realise what it is like and how important continuity and stability is to your health and well being. I saw it happen to my mother!

Housing is a basic need and I think the government has a responsibility to help where people find themselves in difficulty. However, any help needs only be the bare minimum. I'd bet in 75% of the UK you can get a very nice 2bed flat for less than half the £13k CAP for a 1 bed flat in London. If you can't afford to live in a particular place then move somewhere you can afford. Ignoring the "shortage of housing argument" for a second the rental market in London has seen almost limitless funding from Housing benefit withdrawing this will have an affect on rents whether landlords want it or not. If you want £13k for your 1bed flat you will have to find a private tenant. More landlords targetting private tenants (as opposed to DSS) will drive rents down. Basic economics. As for the housing shortage surely moving people out of the overcrowded London will help this too, there isn't a shortage in the rest of the country.

Housing is a basic need and I think the government has a responsibility to help where people find themselves in difficulty. However, any help needs only be the bare minimum. I'd bet in 75% of the UK you can get a very nice 2bed flat for less than half the £13k CAP for a 1 bed flat in London. If you can't afford to live in a particular place then move somewhere you can afford. Ignoring the "shortage of housing argument" for a second the rental market in London has seen almost limitless funding from Housing benefit withdrawing this will have an affect on rents whether landlords want it or not. If you want £13k for your 1bed flat you will have to find a private tenant. More landlords targetting private tenants (as opposed to DSS) will drive rents down. Basic economics. As for the housing shortage surely moving people out of the overcrowded London will help this too, there isn't a shortage in the rest of the country.

Why should older people continue to live in social housing of 3/4 bedrooms be allowed to continue to live in larger properties, when the rents are being paid by taxpayers? It beggars belief that because you are old, & get your rent paid by the taxpayer, that you are immune from normal laws.

The cost to the taxpayer for the care of older people is amongst the highest: as an older person you are entitled to so much more than any other, yet no one wants to tackle the issue of how to pay for their care - relatives do not care for their elderly, so taxpayers have to fund their care - I am fed up with this!

It is time that families took on some of the responsibility of funding care for their elderly relatives - after all, when your elderly relative is pushing up daisies, surely you benefit from being a beneficiary?

People in the UK - absent fathers, single mothers, the elderly - all seem to believe that they are entitled - well, as a taxpayer, my net earnings are less than 50% of my gross because as a responsible citizen, I save up for my retirement. Though only earning average wages, more than 45% of my earnings are deducted to pay for those unemployed etc. We have people who are born into a culture of entitlement & seem to think money grows on trees!

This idea that landlords will simply refuse to lower rents is economically illiterate rubbish. No landlord would chose a housing benefit tenant if they knew they could get working tenants for the same rent. People only chose tenants on benefits to milk the system.

Now that the cash cow is dead (or at least producing a lot less milk) landlords will have a simple choice: accept lower rents from HB tenants or target working tenants, which will mean more landlords competing for a (diminishing) pool of people with jobs. Either will lead to rents reducing, which is hardly rocket science - if you reduce aggregate demand and supply remains broadly stable, prices will go down.

Oh, and don't forget the LSL figures showed rents started falling in December - BEFORE these latest changes went through......

Very good article.

I agree wit the above comment; why should the unemployed on benefits live in a property that requires a £300,000 income to live there. Most people would be better off giving up their current job, getting a low paid / no job and going on benefits.

I think there will be a glut of properties in these areas (few else can afford those rents), prices will have to drop, some landlords will sell (bring property prices down)

It will also result in a bit of gerrymandering for the conservatives (remember shelia sherlock of tesco fame) and reduce the labour vote in areas like westminster etc

Who will do the low paid (but very essential) jobs in these areas, as nobody can afford to pay the commute on those wages? Earning £5/hr you get £35/ day - NI - small amount of tax. Net pay is under £30/day - £10 commute. More money if you stay at home on the dole or choose a min wage £3.50/hr local job.

Well said, Barry 1936. These inhumane comments come from those who can't empathise... Whether from innate hardness, or from foolishness, like IDS, it's difficult to ascertain!

The policy is applied nationally but designed on the basis of a few households in London who have come to the attention the the Daily Mail. No one can yet guess the overall impact but it is intended as a punitive policy and is likely to be so.

Most bizarrely in this environment the government plans to extend the Right to Buy. As far back as 2003 (before the huge BTL boom) well over 20% of RTB stock in London was transferred to private rental within 3 years thus doubling or trebling the old council rents for often the same client group. My estimate is that across the UK the government pays an EXTRA £2bn per year for this simple tenure switch for HB eligible households (and most rents for ex council stock will be well within the new LHA limits nationally). Extending the Right to Buy, far from cutting the benefits bill, will simply increase it on a permanent basis.

Nigel- I am actually against right to buy in any form but the govenment are making it a criminal offence to rent out a right to buy from the council. 2 years in jail! Let's hope they can back date it!

BarryG

Just because you are elderly, does not mean you should be allowed to stay in a property larger than is required, because you do not pick up the tab for the rent, taxpayers are!

It is exactly this sense of entitlements that has led to single parents expecting to have their chosen lifestyles funded by the taxpayer.

I can guarantee that I will not be looking to taxpayers to fund my boob job removal, or my fat busting surgery, or my retirement funded by others!

You have to balance the emotional ties of elderly people living in far too large properties with the emotions of a young working family who can't get a house to live in because its blocked. The needs of the many outweigh the few as Spock would say. Welfare was not meant to be a WAY of life it was supposed to be a temporary safety net so people in hardship did not starve. The fact is there are so many people selecting welfare rather than working because its the easy route to get above average wage and bring numerous kids up, the more kids the more profit, the larger the house which eventually is the one we discuss being blocked. The result of all the abuse is the state cannot afford the luxury of being magnanimous to anyone hence the cuts and its the ones who have systematically and continually abused the system causing it to fail that complain the loudest. As Rose G says, what about families helping elderly relatives out or having their relatives stay with them (shock/horror). What about the radical notion of SAVING for retirement or EDUCATING yourself for a better job? I'm fed up of these do gooders spouting about the rights of the welfare claimants, perhaps we should create a special tax bracket for them to spread their charity with. I am totally up for helping people out but NOT those that won't help themselves.

No they are not .

It will only be an offence if you rent your council property; not if you have bought it.

Unlikely that rents will fall. Just look at the situation in cities in countries where no welfare benefits are paid. Do you see cheap rents with rich and poor living happily side by side? No, you get the expensive prime central area patrolled by armed guards and the poor live in slums on the periphery.

I was at one time looking at property on the North Kent Coast and would like someone to pinpoint the towns concerned as they need to be avoided.

This, coupled with the Tory desperation to all but give away council homes seems like it might end in tears for many. We are and have been for years moving the care of elderly and disabled into the community. More and more are encouraged to stay in their homes often with hard pressed carers trying to meet their needs in a few minutes a day. The increasing number of people needing rented homes as immigrants swarm in to many of our towns must be effecting things adversely.

What it is that is enabling these high rents should be sorted out. The ongoing trend of creating poverty at a shocking rate while also importing it at a similar rate is going to cost the tax payer one way or another or we will see more cardboard box towns and more towns like the one near me taken from a thriving community to a ghetto in less than two years.

How does this stand up next to the child poverty figures that our leader seems to be creating with one hand while claiming to improve it with the other.

I agree with Ines. I rent a 2 bedroom house with a nice garden in a gated community in West London for £800 a month. I am told that is a little on the low side but as the tenants have been there for over 10 years the local estate agent thinks it a fair rent. I appreciate some landlords are like sharks, but I suspect there are many more like me who try to be fair and think the housing benefit is still over generous in some areas.

Because the local councils paid so much to landlords for a guarenteed period, this naturally pushed the rents up in the private sector, the councils offered generous rents as private landords were reluctant to take housing benefit as landords feared that housing benefit equated to problem tenants. I cant see how anyone withn a knowledge of the rental market could disagree with this.

So if housing benefit comes down the logical conclusion would be that private rents should reuce as well, however the demand in London is so great that I doubt it will have much effect. Only affordability will bring down rents.

Debt Free is bang on the money; any notion that 800,000 properties currently occupied by HB tenants will be snapped up by private rent paying tenants is pure BTL fantasy.

Unleveraged landlords might be able to play the waiting game, those with mortgages won't. We'll see rents fall and as yields fall, prices investors pay for houses will fall too. HB is a massive prop to an artificially inflated housing market.

And, get this people. Lower housing costs, be it rents or mortgage payments, are good for this country's future. Not good for estate agents/letting agents or middle aged homeowners with an eye on retirement. Nor will it be so good for our state owned banks, whose balance sheet veracity requires house prices to remain at current levels, but for the vast majority of the population, lower housing costs will make the UK a more agreeable place in which to live and work.

/The problem is that all the vacant properties arein the wrong place. You can buy a 3 bed property in Hartlepool for next to nothing compared with anywhere in the South East where All the popul;ation appears to want to live. Houses are cheap in the West Riding of Yorkshire Bradford, etc. There is absolutely no reason why an immigrant family needs to live in Kensington to the tune of a £100000 pa Housing benefit, send them up north. The Council could buy them a decent property up there and save millions in Housing benefit. The whole thing smacks of "do gooding" and patronising largess with somebody else's money.

'immigrant family' I disagree with that coment imimigrant's work hard but we should send every social housing benifit person who does not work the full 40 hours from the capital up to the north to save the country billions.

Its got all out of hand

Ive been a landlord long enough to remmember when we had Rent Officers long before the 1988 Houseing Act

The old system did work although it had its faults we went from a system that was to tight to a sytem of being too lax

We need a fair system for all users of benifits and the Tax payer

from a bussiness point of view I try not to house LHA Tenants

You have to be very carefull who your takeing and vetting and a garantour is the key

But there is good and bad so lets not through out the bath water with the baby

The new rules that under 35 get a room rate will cause problems and I can see us going back to doss houses in the market of HMO,s

I belive the south will feel the pinch more than the North and there will be homlessness

But we need reform of the LHA System

As always Dislexic Landlord makes some good points, and he is right there is good and bad. With the crises in Euroland there could well be an influx of pensioners who have lived abroad for 15 or 20 years who the LHA are going to have to house and might well be excellent tenants and a very different kettle of fish to the 30 year old never worked druggy mother with two kids that the LHA sometimes try to place.

One point that I don't think has been mentioned so far is when respectable longstanding private tenants hit hard times and need housing benefit for a few months or years, For them HB is the safety net it was designed to be. As always it is those that abuse the system that bring it into disrepute and get the publicity which results in kneejerk reactions in Westminster.

Billions has been invested into Buy-To--Let investment,which has saved the government billions plus interest.

There is nothing coincidental in these proposals.The government are banking on private landlords not off- loading their properties onto an already depressed--and falling--market.

The PRS is being prepared for rent- control and much more tenant- friendly legislation...... both of which will be counter-productive.

Rent controls were brought in in 1915 to help control wartime inflation -- and stayed until 1988!

Put not your trust in princes.

I have a buy-to-let property which is let to professional people. The income supplements my income and I pay tax on the rent and also have to maintain and update the property. I have always paid tax and will not be a burden on the state. If I am forced to take DHSS tenants I will sell the house as I'm sure would many landlords. The result would be that property prices will drop I know if anyone can sell. I would do it rather than risk my property being trashed. Agree that the problem is in London and surrounding areas as I get a moderate rent for my property.

FAO John Rodgers

Dot rush into anything John

You will not be forced to take DHSS

YOu sound as if you know what your doing your makeing profits and paying tax on them

In the long term you will make money on capital growth too

Stick to your Guns Good Rental Property will always win in the end

The Key to BTL is know your market and if ot works stick too it

I know quite a few Landlords that make very good profits on LHA but its not for everyone Myself included

Best of luck what ever you do

I agree that social housing should only supply the number of bedrooms required - in theory. But why only bash 'the elderly' ?

How long after a tenant gets divorced, or when their kids move out should the purge begin?

Should single mothers have a cap on one bedroom for one baby - and too bad if they decide to have any more?

And what about all those millions of benefit scroungers. Shouldn`t we take away their social housing if they won`t get a job.

They'll end up sent to the salt mines in a Seaside Ghetto......

Like Brighton, where they won't qualify for any benefits because they are not 'local'!.