Monday, 02 March 2015

Landlords urge Osborne to axe further welfare cuts

Housing associations have urged the chancellor not to announce further welfare cuts when he delivers his autumn statement next month.

In a submission issued ahead of the 5 December announcement, umbrella body the National Housing Federation calls on George Osborne to reject further welfare cuts and ensure a ‘common-sense approach’ is taken with existing reforms due to come in next year.

It argues benefits must keep pace with rising living costs once the universal credit is introduced, and mechanisms should be put in place to ensure landlords do not see an increase in arrears as a result of direct payment.

Under universal credit, which will be phased in from April 2013, current benefits will be combined into a single payment. The housing element of the credit will be paid to tenants, rather than going straight to their landlord, raising fears that more tenants will fail to pay their rent.

The NHF warns arrears could double to around £1 billion. ‘This will severely impact on [housing associations’] ability to service debt, which could lead to a re-pricing on existing loans and reduce their ability to attract competitively priced finance in future,’ it states.

‘This will undermine housing associations’ ability to access the same level of funding, resulting in fewer homes being built.’

The federation calls for a ‘speedy and effective process for switching payments from claimant to landlord after a specified period of non-payment of rent by any tenant’.

Mr Osborne told the Conservative Party conference in October that he wants to reduce welfare spending by £10 billion by the first year of the next parliament, on top of existing cuts.

In the five-point submission the NHF also urges the chancellor to clarify long-term plans for social rents so housing associations can plan to build homes after 2015.

‘Housing associations are ready to build now but are finding that the uncertainty regarding government’s plans post-2015 are acting as a barrier to their long-term planning,’ it states.

The NHF wants Mr Osborne to announce that the current formula for rent setting, of retail price index inflation plus 0.5 per cent, will be retained until at least 2020.

‘This would help attract investors and ensure housing associations can ramp up development, creating jobs and driving the growth we need,’ it states.

The NHF’s other demands are that the public land release programme should be accelerated, with small sites made available to housing associations through an open competition.

It calls for VAT on services provided to housing associations to renovate stock to be cut to 5 per cent, arguing this would save the 25 biggest housing associations £135 million a year, allowing them to finance the building of an extra 7,000 homes a year.

And it calls for the cap on local authority borrowing to be raised to ‘realise the full potential of council housing finance reforms’.

Readers' comments (13)

  • Catherine Meredith

    When will they ever learn? Big case of deja vue here...never mind 'fearing that more tenants will fail to pay their rent' they won't pay their rent full stop. What happens then? They are let off and the government will reimburse the landlord....simple as. Hold on to your seat belts!!

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  • Daedalus

    Dream on Kate M.

    The government will NOT reimburse the landlord. The landlord will be expected to absorb the shortfall by saving money on repairs and refurbishments and by cutting house building programs.

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  • Chris

    The sector clearly realises the extent HB is intended to take the strain. Without grant or borrowing being accesible, if benefits are cut then how will there be new development except on the backs of the 'hard working' poor who are marginally above the benefit limit. Maxing out rents will be the only alternative to not building - hurting those who can least afford the extra cost, simply so the government can meet its philosophical objectives (and reduce taxation to those not quite so squeezed!)

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  • When is someone in Parliament going to stand up and be counted and say enough is enough, the poor cannot shoulder any more sanctions & cuts, let the rich and privileged and the bankers now take their long overdo share. The top of the ladder should be sorted first not the bottom of the ladder. I cannot believe that this as not become a human rights issue before now and as such this government as not really got started on it`s ruthless regime against the poor and vulnerable in our society

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  • Hallelujah. The NHF has finally discovered its voice and should be encouraged wholeheartedly. If HAs could now also galvanise tenants in supporting that voice they would really be cooking with gas. It is essential in this type of climate that the housing sector has effective campaigns running, in the same way as the planning/localism issue went. Come on now, adapt or die.

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  • Joe Halewood

    Self-defeating anyone?

    If the NHF want welfare benefits to increase at CPI (2.1%) and rents to increase by RPI+0.5% (3.1%) yet the OBC cap still rises in line with average earnings (1.5%) then more and more social tenants will fall foul of the systemic flaw in the overall benefit cap as welfare benefits and rents rise faster than the cap.

    In short the cap reduces in real terms each year.

    Given that the OBC works by firstly deducting the WB amount fro the cap leavign a residual maximum to pay in HB than the ONLY benefit cut each year and at a higher rate due to the systemic flaw is....Housing Benefit!

    In essence the NHf are lobbying Osborne to make sure they receive less of their income in HB each and every year!

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  • These benefit cuts are not one off reductions , but annual cuts ,
    meaning that poor people in the uk will lose tens of Billions
    of vital income whilst prices are also allowed to keep increasing !
    The Universal credit also seems like another benefit cut , as
    at present claimants are entitled to seperate amounts for
    unemployment / housing benefits and council tax benefit, but
    UC only gives a claimant one single amount and that might not
    be the same as 3 seperate benefit amounts , creating another
    damaging shortfall.

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  • Peter Fish

    How kind of the Federation to argue for 'their share' of a persons' reduced benefit, before that person gets to feed themselves even. Obviously houses full of starving tenants is not as bad as houses full of poor tenants with arrears.

    Where was the NHF when the mechanisms for culling the poor were rolled out!

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  • Rick Campbell

    Strange that the government targets individuals who can least afford it whilst a small fraction of that number escape ......

    The NHF, no matter what it protests or what landlords contribute to them, will always speak up when it suits the landlords.

    Anyone speaking out for or as a tenant is liable to be 'pilloried'.

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  • My housing benefit is up 26% in just 5 years, minimum wage is up just 8%. Those hard pressed workers (I used to be one) have little incentive to work, how long till they jump onto benefits too. Social housing eh, keeping you on the dole and taking all of your wages off you, if you do work.
    Anti-social housing if you ask me. Anti social rent rises and too many non jobs. HAs are the new public sector, you get good pensions too, perhaps I might have to join the gravy train. You get bored of the dole, and private sector work is not very attractive, perhaps I can get some non job in a HA, they have lots of cash reserves, which is ironic since they are supposed to be not for profit, and they are always happy to apply maximum rent rises. And set rents 5% above target rents (the maximum they can do so legally).

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