Housing benefit cuts are "recipe for destitution"
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The government’s proposed cuts to housing benefits are a “recipe for destitution” that will hinder the UK’s economic recovery, the British Property Federation is warning.
The BPF says the cuts will be hard for up to 800,000 claimants of Local Housing Allowance, who may be forced to move away from employment hot spots because of high housing demand.
It estimates there are over 400,000 new claimants that will be hit by the changes, and that a further 400,000 people already in work and claiming the benefit may be priced out of their homes -and so potentially have to leave their jobs.
Under government proposals, LHA will be capped at 30% of average local rents, and in what the BPF condemned as “the most unfair and damaging of the coalition’s Budget reforms”, housing benefit will be linked in future to consumer price inflation rather than the higher retail price index.
With half of LHA claimants living in areas of high housing demand, the BPF questioned whether those subject to the cuts will be able to afford to live in the most popular towns and cities across the UK.
It also questioned proposals to link benefits to CPI, pointing to HM Treasury evidence which shows rents grow at the same long-term rate as earnings, about 4%, whilst the Bank of England seeks to keep CPI to 2% growth per annum.
The BPF is calling for government to give greater thought to the impact of its proposals and transition arrangements in introducing the policy.
Ian Fletcher, director of policy at BPF, says: “Reform is needed, but yet more piecemeal changes to Local Housing Allowance are just making a flawed system worse. The government’s proposals to reduce the country’s housing benefit bill have ramifications for a far wider demographic than the long-term unemployed.
“For the victims of the recent recession and working claimants the last thing they need is to move away from their local jobs market as a result of the cuts to their housing benefit entitlement. It is no means certain that the policy will incentivise claimants back to work and could have the opposite effect.
“There is no logical or moral justification for linking a person’s housing costs to the price of sausages and net curtains. A link to CPI will rapidly and relentlessly erode what local housing allowance can pay for and provides a recipe for destitution.”
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Readers' comments (11)
Andy | 7 Sep 2010 3:53 pm
Housing benefit is a subsidy to landlords. If housing benfit is reduced, then on average, rents wll reduce.
Soial housing is pretty much a zero sum game. I know of no landlords who would leave the house empty rather than take £10 pw less.
If people ant afford to rent a house even though they are in an employment hotspot, what does tis say about the price of rents/property in relation to wages?
More VI nonsense
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Anonymous | 7 Sep 2010 4:39 pm
What rubbish the first subscriber has said, he clearly knows nothing about the manner in which such Housing Benefits are paid.In a significant majority of cases , the rent is paid to the tenant NOT the Landlord and there is clear evidence of a high level of default by such tenants who know how to operate the system to their benefit, in the meantime the Landlord has to pay the mortgage and despite any arrears occurring has a legal responsibility to maintain the property otherwise the tenants are quick to call in the Environmental Heath Officer.If the rent were to be paid direct to the Landlord then yes anyone might consider a slightly lower rent if circumstances dictated.Please know your facts before making such ludicrous comments on this forum
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geolibertarian | 7 Sep 2010 5:52 pm
More bleating from those with their mouths firmly fixed on the Government teat - I shall enjoy the pain of the BTL parasites in the coming year of property bubble collapse
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davidb | 7 Sep 2010 6:27 pm
If an employer wants someone to work in a certain area then he must pay enough to allow the worker to live in that area and not expect the tax payer to subsidize him.
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Tony | 7 Sep 2010 6:45 pm
It is an "indirect" subsidy to landlords because it inflates demand for rental properties, and ultimately rents, because the recipients can compete with those on higher incomes.
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Steele | 7 Sep 2010 7:04 pm
The second comment here is gibberish. What you have identified is something called "business risk". Letting a property is a business, live with it or get out of the game.
The remedy is to properly background check your proposed tenants.
As the first commentator has correctly identified, housing benefit is a benefit to landlords at the expense of the tax payer.
The only significant consequence of this change is that landlords will be able to milk the system slightly less and private tenants will pay slightly less for their rent.
The vested interest slant of the BPF is, frankly, hilarious.
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Pete Hughes | 7 Sep 2010 7:25 pm
The first commenter is correct. In many areas rents, and therefore property prices, are set by HB levels.
Whether the tenant fails to pay is a different matter.
Landlords, including those who don't have DSS tenants, should be very happy that generous HB still remain.
Without HB how much would a slum flat rent for? £20pw ?
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Rob Moore | 7 Sep 2010 8:46 pm
I am a landlord and my housing benefit tenant has fallen behind in the rent; by about 6 weeks which means I cannot take any action and she has pocketed £750 for the month's rent which she had from the council but didn't pay me. People like this deserve to be forced to move to cheaper properties away from housing hotspots. She's got no desire to work (she has just had another illegitimate child) so put all these people up north where the housing is cheap, leave them to it and let someone who is willing to contribute to society and work hard have that house. In other words, as a LANDLORD, I fully support this cap and all its ramifications.
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Billy | 7 Sep 2010 11:24 pm
What Andy has said is exactly right and the Anonymous person I suggest you get your facts right. What nonsense you dribble! The reason rents are so high is because landlords can get away with charging scandalous amounts to tenants claiming housing benefit as the government foot the bill with benefit. This pushes rent up all over if their are people able to pay it. I bet you are a landlord yourself to come out with such rubbish. I work but I'm not on great wages so I get some housing benefit but I agree this is long overdue. Way to much benefit is handed out and its not that people need it to live as it just means they can afford nice holidays and waste money on beer and fags etc. Most people I see not working or working little have some of the best quality of life. I work hard and get very stressed by my job and have very little free time unlike many on benefits but they still get the same luxury's as me and all the free time. Benefit should be so you can just afford essential items only so the motivation is there to still go out and work. If I had my way I would cut benefit even more than already planned even if this means I get nothing to help me. I get very little benefit and really I could live with it but if its offered then I will take it just like everyone else does. The sooner this come in the better.
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Stu | 10 Sep 2010 9:39 am
Sweeping cuts are likely to be detrimental as people are unable to rapidly adjust to the change in circumstances. Progressive reductions less so. In any case a limit on the proportion of rent payable would be a suitable measure. Having said that, it should also be proportionate to the number of people residing at the property. I am working, married with a family of five children and lost my 6 figure income due to the recession. A three bedroom property is £900 per month minimum in our area. Without assistance, we would not be able to afford to rent adequate accomodation here or likely anywhere else. So I see the argument from both sides. My feeling is more should be done to prevent the system being played to ensure that only genuine claims are paid. Both my wife and I work for low wages as we work towards increasing our income and we struggle like most people. Not all HB claims are from the stereotypical scrounger. The tax I have paid into the system over the years is well over six figures - perhaps in order to claim there should be a minimal qualifying period similar to other european countries (Spain) where you have to be resident, have paid into the system for a minimum of 36 months either employed or self employed.
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