Housing benefit changes will boost flat sharing

22 October 2010 | By Samuel Dale

Under the government’s reforms, the age threshold for the Shared Room Rate in housing benefit is due to increase from 25 to 35 from April 2012.

Department of Work and Pensions statistics shows that approximately 166,930 are currently eligible for the SRR benefit.

The reform will mean 260,330 housing benefit recipients between 25 and 35 years old will no longer qualify for their own flat or house, but would have to share accommodation instead.

Currently, the UK’s flat sharing population stands at 2,765,000. If all those eligible in the new age group took the benefit and moved into shared rented homes, this could rise to 3,025,330 – an increase of 9.4%.

The average UK rent for a flat sharer stands at £348 per month. Easyroommate.co.uk calculate that a 9.4% increase in the number of flatmates competing for the same level of accommodation could push rents as high as £381 per month – on top of the current upward pressure on rent from indebted graduates and deferring first-time buyers.

Jonathan Moore, director of easyroommate.co.uk, says the private rented sector is already under strain from frustrated first time buyers.

He says: “With public spending cuts squeezing families financially, we may see more families looking to rent out rooms, mitigating the effect slightly. But this increase won’t match the surge in demand.

“For landlords, this is good news. Live-in landlords will be able to raise rents, pocketing an extra £30 a month.

“But current tenants will have a gloomier outlook.  Residential property rents are already at record levels – and it looks like the cost of renting a room is likely to mirror that upwards trend. Current flat sharers will need to tighten their belts even further to cope with a rents hike.”

If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat