Is It Really A Happy New Year For Benefit Tenants?

Landlords move away from benefit tenants

Welfare Reforms could see an end to Private sector tenants claiming benefits

Researchers claim that the uk’s welfare reforms will make more than three quarters of a million homes unaffordable for tenants.

The Government Welfare Reform payment caps came into force this week (1st January 2012) meaning that more than 810,000 private rented homes unaffordable for tenants claiming the housing allowance under the new “Universal Credit” system.

Research by the Chartered Institute of Housing (CIH), 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 sector properties in England will become unaffordable to tenants claiming housing benefit, 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 Institute.

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.

This will mean that only one-third of private rental sector (PRS) accommodation in any area will be available for LHA tenants.

These changes will mean there will be more families claiming benefit than there are available homes in some areas says the CIH research.

Private sector landlords have been under pressure to reduce their rents to the level of the new caps, in some cases in return for receiving LHA payments directly.

Tenants whose landlords have decided against cutting rents, have the choice of paying the difference themselves, if they can afford it, relocating to a cheaper rental property or eviction.

The welfare reforms come at a time when more people are seeking rental properties than the market is currently able to provide.

Many tenants with families want to stay in their communities and they could be forced to borrow more or to spend less on essential items such as food. Low income families could move to more affordable areas, creating benefit ghettoes increasing social disorder disrupting whole communities.

Over 1.3 Million private tenants started the 2012 New Year with dread, confronted with the uncomfortable prospect of homelessness through eviction or facing increasingly severe debts.

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