Posted by: Jules Birch19/10/2012
Remember when David Cameron claimed that housing benefit cuts were bringing down rent levels? I bet he doesn’t now either.
Cameron said at prime minister’s questions in January that: ‘What we have seen so far, as housing benefit has been reformed and reduced, is that rent levels have come down, so we have stopped ripping off the taxpayer.’
The claim provoked almost universal derision at the time but (ex) housing minister Grant Shapps backed up his boss and said he had been referring to a survey by LSL Property Services showing that the average rent fell 0.8 per cent between November and December.
Nine months on and the latest LSL survey has just revealed a 3.2 per cent rise in the average private rent in England and Wales to a new record of £741 a month. Rents soared by 1.1 per cent in September alone.
In London, where the bedroom size caps in local housing allowance hailed by Cameron should have had the most impact, rents rose almost twice as quickly. The average rent is now 6.2 per cent higher than a year ago at £1,092.
The one bright spot in the survey is that the 9.1 per cent of rent that was late or went unpaid was slightly below the 12-month average of 9.5 per cent.
However, that was put into context by a survey yesterday from the Money Advice Trust showing that calls to its national debtline about rent arrears have increased by 99 per cent since 2007.
Almost 10 per cent of callers between January and August 2012 had rent arrears compared to 8 per cent in 2011 and 6 per cent in 2007. And renters made up more than half of callers for the first time ever.
Joanna Elson, chief executive of the Money Advice Trust, warned of a ‘dangerous spiral’ as stagnant earnings growth and sharp jumps in rental costs risked pushing people over the edge.
The really worrying thing is that all this pressure is building up before the firestorm of welfare reform hits next April. Social tenants face massive problems of their own with the bedroom tax but social and private tenants will both be hit the overall benefit cap and cuts in council tax benefit. Six months later the universal credit starts and there were more dire warnings of the effect on disabled people and their families this week.
Far from the reductions in rents claimed by the prime minister and the new Conservative party chairman, welfare reform is looking exactly as critics claimed it would be: a guaranteed way of ringing up arrears and eventual homelessness.
Just as well then that Cameron has turned his attention to bringing down gas and electricity bills – but then that doesn’t seem to be working out too well so far either.
From Inside edge
Housing commentator Jules Birch puts the latest news in context