Housing Benefit Cut..


The government’s decision to clamp down on the £21bn housing benefit bill has sent shockwaves throughout the private rented sector.

From next April, housing benefit will be capped at £400 per week for a 4+ bedroomed property, £340 for a 3-bedroomed, £290 for a 2-bedroomed and £250 for a 1-bedroomed. The cut is aimed to reduce the present £103,000 maximum housing benefit, which can be claimed each year by slashing it to £20,800.

The blanket cut couldn’t have come at a worse time for tenants. The previous government’s forecast that an estimated 240,000 new builds were needed each year, running up to 2020 to sustain the growth and housing requirements for the country’s residents, but only a mere 118,000 were completed in 2009.

The deficit resulting from the scarcity of new housing under the local authority umbrella and unobtainable mortgages has resulted in a major increase of consumers looking to the private rented sector to house them. Because of LHA payment rules, were rent is paid direct to the tenant, landlords are already reluctant to give tenancies to those in receipt of the benefit. The recent slash in this week’s budget will no doubt see thousands evicted as a result.

Obviously, it is understandable to be angered and frustrated that taxpayers subsidise luxurious accommodation in some of the most affluent areas in Britain, while most of us can only aspire to obtain such a residence. Many people have a view that landlords have deliberately upped the rents to cipher more money from the benefits system is undoubtedly a misconception. Certain areas obviously command higher rents. Whether the tenant is receiving LHA benefit or is working, the rent, which has been set will be on par with the current going rate in that particular neighbourhood. The recent shift in the rising trend for privately rented accommodation now see’s the landlord in an abundance of potential tenants.

The recent proposal of capping mortgages at an LTV of 75% will only exacerbate things. Banks already impede the borrower, holding the reins and subjugate with austerity to mortgage applicants. Expecting a 25% deposit upfront will make mortgages a mere pipe dream for most people. As a result the country’s housing benefit bill will rise. As with a mortgage, there is no weekly or monthly aid in the guise of benefits for people who are working to subsidize mortgage payments, however, in most cases, even when working, most people receive a subsidy through housing benefit for rented accommodation.

You do the maths Mr. Osborne.

Madalena Penny

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