What's the benefit?
All posts from: May 2011
Alan Ward, chairman of the Residential Landlords Association, claims the government’s housing benefit policy will hurt private landlords and their tenants.
In their foreword to the coalition agreement, David Cameron and Nick Clegg committed the government to enabling people to ‘make better choices for themselves’.
This is a principle which the Residential Landlords Association supports, which is why it is calling on the government to remain true to its word and extend the principle of choice to private sector tenants in receipt of housing benefits. This would enable them to decide who should receive their benefit, themselves or their landlord.
According to the government, paying housing benefits direct to tenants works to support and promote financial responsibility. The only problem with this is that many tenants feel it would be more responsible to have their benefits paid directly to their landlord. In 2009, for example, data from a survey of LHA claimants by Shelter found that of those claimants who would choose for payments to be made directly to their landlord, 95 per cent were struggling to manage their finances.
The government’s decision to allow councils to pay housing benefit direct to landlords who cut their rents fails to take account of the real world in which cuts are simply not viable. Landlords have seen average yields fall from 6.8 per cent in 2002 to 5 per cent currently. They also now pay tax on their rental income at 40 per cent.
Small-scale landlords constitute the life-blood of the private rented sector. If we are to grow the sector to meet increasing demand, forcing further cuts through the benefits system will do little to attract new investment from landlords.
Surely the people who should make the decision as to how best they are able to manage their finances are the tenants themselves.
More broadly, the government’s changes to housing benefits are beginning to show a worrying lack of joined-up thinking across Whitehall, and we urge DCLG and DWP to work more coherently together better to support the private rented sector to meet the needs of those for whom the sector provides the only hope of meeting their housing needs and aspirations.
Take for example the decision to increase the age limit at which benefit recipients can claim only for a room in a shared house from 25 to 35. Government estimates suggest that this could affect 88,000 tenants, although the RLA believes this is a gross underestimate given there are 1.16 million private tenants between 25 and 34.
At the same time as DWP is forcing many more people into shared accommodation, many local authorities are using new planning powers to restrict the growth of houses of multiple occupation. A recent survey found there is already a shortage of suitable shared accommodation.
Implementing tenant choice is a cost-free move that would help many tenants to avoid rent arrears and, if it is not willing to reconsider the increase in the age threshold for the shared accommodation rate, the government should repeal the article four regulations that enable councils to restrict the growth of shared housing.