What effect (if any) will the changes to housing benefit have on the rental market?

drc

Just wondering if the changes to housing benefit announced in the budget and starting in October 2010 will have an effect on rents across the spectrum or just the highest rents. What do others think?

From the Times;

http://business.timesonline.co.uk/tol/business/economics/budget/article7074953.ece

Budget 2010: 13,000 families hit as housing benefit capped at £1,100 a week


Hundreds of out-of-work families who have been living in expensive homes at the taxpayers’ expense are facing eviction after changes to housing benefit announced yesterday.
Alistair Darling said that from October next year the most expensive properties would be removed from the housing benefit calculation.
Housing benefit, which can be as much as £1,800 a week, discouraged people from working and was unfair on those who accepted smaller, cheaper homes, he said.
Until now, the Government has shied away from tackling this benefit, fearing that there may be too many losers.
Housing benefit will be capped at £1,100 a week, meaning that 13,000 families, mostly in London, will have to move out of their current properties and into somewhere more modest.
“Housing benefit is really important to help families on low income pay their rent. But it isn’t fair for the taxpayer to fund a very small minority of people to live in expensive houses which hard-working families could never afford,” said Yvette Cooper, the Work and Pensions Secretary.
“This important step helps remove excessive rents used in calculating LHA rates. We will publish further plans later in the year which will do even more to make the system fairer, and to make sure housing benefit encourages people into jobs.”
The Government’s reluctance to reform housing benefit has resulted in the bill growing from £11 billion in 1998 to £17.4 billion in 2008-09. It goes to 4.5 million claimants who get an average of £81 a week.
The measure on excessive claims would contribute to savings of almost £250 million a year. The Treasury has said that the bill could rise to £20 billion by 2011 because of the recession, soaring private rents and a shortage of social housing. The average social housing rent is £72 a week compared with £108 in the private sector.
Plans to overhaul housing benefit were revealed in The Times last month.
Other budget changes included a new “toddler tax credit” for parents of children aged between 1 and 2, who will get up to £200 a year extra per child, or £4 a week. Up to 885,000 families on incomes of under £50,000 will benefit.
There will also be a boost, worth up to £56 a week, for grandparents and other “unsung heroes” who look after children when the child’s own parents cannot.
Any payments made by local councils for “kinship care” will no longer be counted against their claims for housing and council tax benefit. Pensioners were told that the higher rates of the winter fuel allowance will continue for another year, so all over 65s will get £250 and those over 80 £400. Increased tax allowance for older workers mean no-one over 75 years old will pay tax on the first £10,000 of income.
The Department for Work and Pensions announced that efficiency savings of £350 million would be made, largely on property and IT. The DWP no longer owns its own property but leases its buildings from a company called Telereal Trillium. The contract allows the department to withdraw from buildings as its needs change without incurring penalties. It will have vacated 800 buildings — 30 per cent of its estate — by 2011.
On IT, savings include £100 million a year by helping people claim their pension and jobseeker’s allowance online, and £100 million through new crackdowns on fraud and error in the benefits system.

mitchaa

£1100 per week is still bonkers.

Graham_Devon

£1100 a week?!?!

Bloody hell.

Oh, and no effect.

ninky_2

it just shows how ridiculous the original levels were. i think instead of paying benefit to cover the rent of the property which is found an accommodation allowance should be paid - with a small increase for each dependent child. this would incentivise people to find the cheapest accommodation (just as those who work have to) rather than the most expensive they can get away with. i have friends with newborn twins who are living in a tiny one bed flat in london. they are having to move because the landlord has sold up and are struggling to find somewhere affordable - they were saying the cheapest 2 bed in their area was nearly £1000 a month. but there is no help for them as the husband works. i don't see why the accommodation of children of the unemployed should be seen as more important than the accommodation of the employed.

carolt

ninky wrote: »

it just shows how ridiculous the original levels were. i think instead of paying benefit to cover the rent of the property which is found an accommodation allowance should be paid - with a small increase for each dependent child. this would incentivise people to find the cheapest accommodation (just as those who work have to) rather than the most expensive they can get away with. i have friends with newborn twins who are living in a tiny one bed flat in london. they are having to move because the landlord has sold up and are struggling to find somewhere affordable - they were saying the cheapest 2 bed in their area was nearly £1000 a month. but there is no help for them as the husband works. i don't see why the accommodation of children of the unemployed should be seen as more important than the accommodation of the employed.

Wish I could thank that several times.

Would add that it's particularly galling for the employed who rent - not only are we - like all hard-working taxpayers - paying out of our taxes to pay for the unemployed to live in expensive homes we (who actually work) could never dream of affording; we then pay again, through higher rents, as this drives rental costs up across the board.

Bloody madness.

Daddy-Spendless

1100 per week, is absolutly rediculous im genuinly shocked that HB would pay that much, i cant think of any reason why it should be done.

PrivatisetheNHSnow

Daddy-Spendless wrote: »

1100 per week, is absolutly rediculous im genuinly shocked that HB would pay that much, i cant think of any reason why it should be done.

because of whino charities that defend the idle

Daddy-Spendless

i wonder how many people who are holed up in a very expensive housing benefit funded house actualy have the career prospects to make the rent themselves?

not many i would guess.

Kohoutek

I wonder if this is still allowed?

A lottery millionaire is receiving thousands of pounds in housing benefit by charging her two unemployed children rent.

An unrepentant Mrs Cowley, from North Tyneside, said she was perfectly within her rights to collect more than £8,000 a year in housing benefit.

http://www.dailymail.co.uk/news/article-387783/Lotto-millionaire-claims-housing-benefit--charging-children.html#ixzz0jCF7Us8e

drc

Kohoutek wrote: »

I wonder if this is still allowed?



http://www.dailymail.co.uk/news/article-387783/Lotto-millionaire-claims-housing-benefit--charging-children.html#ixzz0jCF7Us8e

Weird. I wonder why she didn't give her kids any money or just give them the houses (the are on income support and housing benefit). Greedy cow.

lemonjelly

Kohoutek wrote: »

I wonder if this is still allowed?



http://www.dailymail.co.uk/news/article-387783/Lotto-millionaire-claims-housing-benefit--charging-children.html#ixzz0jCF7Us8e

I haven't read the article, but expect it is spun somewhere. The rules for housing benefit expressly state that you cannot rent from a relative.

If this impacts at all, it will only impact in London/the south.

Thing is, it is unneccessary. What they should do instead, is re-enforce the role of the rents officers, who are allowed to class rents as excessive, overpriced, & can place restrictions on the amount of benefit to be paid.