1st January 2012 will see further changes to Local Housing Allowance (LHA) under the Government’s welfare reform.
The age limit for shared accommodation room rate is set to rise from 25 to 35
This means that anyone under 35 and living by themselves or renting a room will be restricted to the shared room accommodation rate.
This new figure is obviously well below the current market rent for 1 bedroom properties in most areas, as this will now be calculated on the 30th percentile of the rental cost for 1 bedroom properties in each area.
This could mean disaster for landlords in the Private Rented Sector (PRS) as tenants in receipt of benefits will soon fall into arrears as their housing portion of their benefit payments are reduced by the Government.
With increasing unemployment due to the state of the UK & World economies, more and more people are finding themselves having to make a claim for state benefits including LHA.
2012 may well see an increase in evictions, homelessness and maybe even a drop in the average property rental price, as landlords could be forced to lower their rents to accommodate tenants who are only entitled to the lower threshold of housing allowance.
This scenario has been cited by landlords who keen to avoid benefit tenants and now are only seeking tenants in employment. The private rented sector could end up the exclusive territory of the employed in a few years time and landlords are urged to make thorough reference checks when accepting new tenants.