It is now the second largest of the Department for Work and Pensions’ annual outgoings (second only to state pensions on £57 billion). In a time of looming austerity it is little wonder that secretary of state Yvette Cooper is keen to rein this back. But what does this week’s publication of the long-awaited consultation on changes to the housing benefit system mean for social landlords?
In the short-term, the news is pretty good. The proposed £60 million cut to the housing benefit bill is relatively small fry and will come from changes to the administration of the much-reviled ‘local housing allowance’, whereby benefit is paid direct to private sector tenants as opposed to their landlords.
Requiring private landlords to ensure their properties meet a certain decency standard before they receive LHA is a sensible step. It may be unpopular with them, but if their homes are to receive public sector funds then they should jump through some of the same hoops as their public sector equivalents. This level playing field becomes even more important as the Homes and Communities Agency continues to court large, more professional investors into the private rented sector, such as Aviva and Legal & General.
Longer-term, the picture is less clear - particularly with an election expected in May. It seems, at present, there is no appetite for extending the principle of direct payments to social tenants. The sector’s finance directors can breathe a sigh of relief.
However, Ms Cooper’s assertion that housing benefit should become more integrated with the ‘wider tax and benefit regime’ should prevent FDs and their bosses relaxing entirely. Allied to the DWP’s ‘principal objective’ of getting more people off benefits and into work, could this mean a cut in housing benefit levels?
At present, this seems unlikely. Ms Cooper is keener to reduce the 4.5 million households which currently depend on housing benefit. This could even present a chance for social landlords. If the housing benefit beast can be tamed, then just maybe Ms Cooper and her cabinet colleagues might look more favourably on the calls for social landlords to be able to vary their rents.
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Readers' comments (2)
Jenny | 03/01/2010 11:09 am
To the layman, it seems ridiculous to spends £1,000's on administration to pay public funds from one pot to the other. Why not just charge less rent to the financially excluded and cut out the need for HB for council housing tenants.
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Penny | 06/01/2010 2:24 pm
As a private landlord, is Stuart Macdonald aware of the the 'hoops' private landlords already jump through that social landlords don't ? Obviously not from his comment. We already have to meet a tolerable standard, have to pay regsitration fees to the local council to be a registered landlord, comply with the PRHP, provide reems of paper and agreements when leasing - none of which the social sector have to do. Also why was it that after 12 months of direct payments of LHA to the private sector the government scrapped its plans to introduce direct payment to social landlords - because it wasn't and isn't working. Obviously it is alright for private landlords to have to deal with tenants not passing on their rent (I am presently out if pocket by the tune of £15,000) but not alright for the social sector. There is no level playing field when it comes to the private rented sector and the social sector - it is heavily in favour of the social sector and always will be
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