Renters to take the strain of benefits freeze

In yesterday’s speech to the Conservative Party Conference, the Chancellor proposed freezing working age benefits for two years and a reduction in the overall household benefit cap from £500 to £442 a week.

The freeze is likely to apply to a wide range of benefits, from jobseekers allowance and income support to tax credits and Local Housing Allowance rates. Disability and pensioner benefits are likely to be excluded.  The rationale is that people claiming benefits shouldn’t see their income increase more than those in work, and there has been little or no wage growth for many people for years.

But this somewhat misses the point, because 41% of working age (16-64) LHA claimants ARE working taxpayers.  With many families now limited to renting privately and private rents still shockingly high in many areas, people in low paid work need LHA to bridge the gap between their earnings and their rent.  But the failure of LHA to keep pace with private rents means that it’s becoming more and more difficult to do so.

A further freeze would compound the broken link between real rents and benefits.  LHA has already been subject to a series of cuts:

  • set to the 30th percentile of local market rents;
  • frozen for 2012/13;  
  • increased in line with CPI rather than RPI inflation from April 2013;
  • limited to 1% rises from 2014 to 2016.

Last year, Shelter warned of the impact that the 1% limit would have on ordinary families.   We gave the example of the two bed LHA rate in Solihull, which was £147.40 pw last April. With a 1% cap, this will increase to just £150.36 by next April.  If LHA rates had increased by CPI inflation, they would be £4.20 a week higher at £154.56.  But rents usually rise even faster than CPI.  So by April 2015 the rate paid will be £11.88 below where we expect rents in the bottom third of the market to be.

This all means it will become more and more difficult to find a landlord willing to let to people on LHA.  We’ve already seen landlords publicly evicting all their tenants on benefits for this reason.

Even if you find a landlord willing to take you on, the lower benefit rates may well not cover the rent, which means having to cut back on bills or food.  Recent Shelter research shows that 625,000 low income households have missed a recent essential household bill and are falling through the safety net.

For those who can’t find an affordable private rented home, turning to the council for homelessness assistance is the last resort. But even being accepted as homeless and receiving council help does not mean the end of your problems. The ending of a private tenancy is now the cause of 30% of all homelessness cases, yet councils are increasingly having to send homeless people back to the private rented sector, raising the prospect of a revolving door of eviction and homelessness.  The use of expensive B&B for families is already at its highest level for 11 years.

A reduction in the overall household benefit cap will also apply to temporary accommodation for homeless families.  In order to find affordable places, councils will have to look further and further afield.  Last week’s homelessness statistics show that a quarter of those placed in temporary accommodation are sent to another area – the highest level since records began in 1998.

For larger families caught by the cap, there is simply no affordable accommodation. A couple with three children will have £176 a week to cover rent and council tax and those with four children only £111.  Short term funding for discretionary housing payments, temporary assistance for those struggling with shortfalls, is beginning to run out, leaving councils to bridge the gap from their own stretched budgets.

The failure of successive governments to build enough genuinely affordable housing has pushed more and more families into private renting, with housing benefit taking the strain.  But existing restrictions mean too many are now falling through the safety net.  If these new proposals take effect, many more families will feel the strain and councils will be left picking up the pieces.  As the election looms, the parties have a challenge getting to grips with fixing the welfare system. The question the public will rightly ask themselves is whether the proposals currently on offer are fair.

  1. Shelter has been disrespectful to private landlords. Those of us who have tenants on housing benefit. Have seen rents stuck at 1% or below or as in 2012-13 frozen. Whilst housing association council rents are going up by 6% or 7%.

    Shelter continue to dig the knife into private landlords by smearing us. YOu read the headline rents going out of control etc… How is that fair?.

    Unlike Councils and Housing association, who get their rent directly. Private Landlords have to wait on HB tenant to decide when to pay their rent. They know the Landlord is over a barrel, because it costs £1,000 to evict them and they have to be in arrears by at least two months.

    I have had HB tenant wreck properties, because when they are evicted they get into temporary accommodation and that makes them a high priority for council housing. Then it costs another £15k to fix the property. You can’t sue a housing benefit has they have no money. Then Shelter say properties are in bad condition (conveniently ignore the fact, some tenants will damage the property).

  2. Hi dear landlord sorry hear your loss
    But there are some landlords out here that get there rent every month
    Like mine albeit late by a few days some months but always every month
    But when we mention repairs the first thing she says is well it was ok before we took on tenancy ? Now we have being served the section 21 but still here awaiting to find a landlord that looks after paying tenants ? Now we are looking forward to going court for eviction As landlords are protected against tenants but the tenants have protection against greedy landlords and agent’s
    So the sooner tenants get more protection and we can have charter of the back ground of good? Or bad landlords may be landlord will stop taking the p and realize that not tenants are bad if treated as humans
    Then maybe private renting could be more better advantage for everyone after all , must if not all working family’s do get housing allowance I’m sure a regular income means regular rent income if landlords only charge a rent value to cover the mortgage then so much for repairs on the property and like mine i know im paying the mortgage on this property and a £300 towards her rent in London.
    Where the fairness in that ?
    Signed a tenant

  3. but the tenants have protection against greedy landlords and agent’s should read
    but the tenants have no protection against greedy landlords and agent’s

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