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

lemonjelly

Since the right to buy was introduced, building of social housing has significantly fallen, & profits from right to buy have been channelled out of the housing budget. We do desperately need to build more social housing.

The other thing I feel we need to do, is take serious action against fraud within the system (ie lone parents who are co-habiting, people working & not declaring income & so on).

ukcarper

drc wrote: »

Or they could just do the opposite and limit LHA allowance rates so they are, say, 75% of the average rent for a specific bedroom property for an area which would mean people would have to choose to rent cheaper properties and be a little more squashed (as they do in the private sector) or they would have to go out and work if they wanted a more expensive property and top up the rent with their wages. This would also bring down rental rates throughout the market since it is LHA that pushes them up in the first place because landlords know they can get more from LHA. A win-win situation for a) the taxpayer b) the private working tenant c) the benefit tenant (since they get to enjoy the joys of working/economic responsibility ).

What percentage of rented houses are rented to LHA tenants and if those rents were dropped by 25% what effect would in have on the housing market, rental and sale. I'm asking because I don't really know.

ukcarper

lemonjelly wrote: »

I'll try to be brief...

LHA is housing benefit for people in privately rented housing. The idea is to make people more responsible for their own financial affairs - I can see the reasoning here - I see clients who will tell me that "they don't pay rent - the council pays it". It is a mindset we need to change. If your rent is paid into your bank account, & all of a sudden 1 week it doesn't turn up, you'll know about it & do something about it. Previously, you could claim housing benefit (hb) & have it paid direct to the LL. A lot of benefit claimants don't regularly read their mail, so if the council write to them with a problem with their hb, the claimant wouldn't always respond.

LHA/hb is a means tested benefit. How much you qualify for depends on
a) your income
b) your savings
c) your personal circumstances

Your income is calculated from wages, benefits, money from trusts, tax credits, pensions & the like. DLA for example would be ignored, but pretty much all other benefits are classed as income. Some income can be disregarded (eg between £5-£20 from wages)

Savings - if you have under £6k, savings don't affect hb. If you have between £6k-£16k your savings affect your hb/LHA, in that for every £250 you have in savings over £6k, you are deemed to have an income of £1 per week (I wish I knew a savings acc with that interest rate!) Savings/capital includes assets. If you have over £16k, you are not entitled to LHA/hb.

Your personal circs - this is a nightmare to explain, please bear with me.
The secretary of state sets out various allowances to calculate what a person in each set of circs needs as a minimum per week to survive. So, there is an amount for a single person, an amount for a couple, an amount if you have children, an amount for a disabled person, an amount for a carer and so on. This builds up to what is called an "applicable amount". To calculate your applicable amount you stack all the allowances up (they all have a financial value) which apply to you. The total gives you what the sec of state says you need each week. This is how JSA/IS are calculated.

To work out hb, you compare income to the applicable amount. If your income is below the applicable amount, then you get full hb/LHA (provided there are no rent restrictions). If your income is above the applicable amount, you may qualify for some hb/LHA, so you work out the difference between the 2 figures, & have to carry out a calculation.

This is a very brief overlook, & there is a lot it doesn't take into account. For example, rent restrictions.

In my experience, hb/LHA costs have escalated at the same time as BTL. Private LL's have been consistently increasing rents, knowing that hb/LHA will cover it. From where I sit, it is they who are milking the system, not the claimants.

In addition, I have no time for LL's bleating about the fact that they sometimes struggle to get the money from the claimant. That is a risk of the business you are in, sorry. Most tenants do pay the rent, & virtually all LA's have a LL liaison officer. Under hb/LHA law, legally there is some specific information the LA has to give you. Further, if the rent is 2+ months in arrears, the LL can have the money paid directly to them to avoid the risk of homelessness.

Private rents are the real cost to the system here. & this is combined with a lot of private LL's letting out sub-standard - or worse properties. For example, an environmental health dept will condemn a property. If they shared this info with the benefits team, then this would prevent the LL moving another tenant in a week after the condemnation. But they don't share the info, & this does happen.

I must say it is very refreshing to have a well thought out and helpful reply instead of some of the posts we have been getting. Which I must admit I might have been guilty of lately but it is difficult to be reply responsibly to some of the post we have been getting lately. So even though I don’t always agree with you I would once again like to thank you.

A_fiend_for_life

That's a staggering amount of rent. Surely rents this size are paid directly to the landlord?

Do any of these come with agency fees?

carolt

lemonjelly wrote: »

Since the right to buy was introduced, building of social housing has significantly fallen, & profits from right to buy have been channelled out of the housing budget. We do desperately need to build more social housing.

The other thing I feel we need to do, is take serious action against fraud within the system (ie lone parents who are co-habiting, people working & not declaring income & so on).

Great post - wish I could thank several times.

Says it all - in a nutshell.

silvercar

I don't know why they don't investigate fraud by looking at people's expenditure. For example, if you are living solely on benefits you get all your rent paid. If the rent you are paying exceeds the HB/LHA for an area & entitlement the tenant pays a top-up. To my mind anyone paying more than a small top-up is getting that money from somewhere and it isn't their benefit because we all know that benefits only give you a basic amount to live off. Same with cars, if there is an expensive car registered to someone solely living on benefits, a check should be made on the finance: either they have a lump sum (not possible as savings are declared for benefits) or they have the car on finance (again where is the money coming from to pay the finance.)

drc

silvercar wrote: »

I don't know why they don't investigate fraud by looking at people's expenditure. For example, if you are living solely on benefits you get all your rent paid. If the rent you are paying exceeds the HB/LHA for an area & entitlement the tenant pays a top-up. To my mind anyone paying more than a small top-up is getting that money from somewhere and it isn't their benefit because we all know that benefits only give you a basic amount to live off.

Not necessarily. If you are a single mother with several kids or if you are a family where a member works 16 hours per week or more you get a lot of help in the form of tax credits (child and working tax credits). Add to that income support or JSA, child benefit, council tax benefit, housing benefit plus free school dinners, free prescriptions and all the free things you get when pregnant then it all adds up.

lemonjelly

ukcarper wrote: »

I must say it is very refreshing to have a well thought out and helpful reply instead of some of the posts we have been getting. Which I must admit I might have been guilty of lately but it is difficult to be reply responsibly to some of the post we have been getting lately. So even though I don’t always agree with you I would once again like to thank you.

You are more than welcome!

In addition

silvercar wrote: »

I don't know why they don't investigate fraud by looking at people's expenditure. For example, if you are living solely on benefits you get all your rent paid. If the rent you are paying exceeds the HB/LHA for an area & entitlement the tenant pays a top-up. To my mind anyone paying more than a small top-up is getting that money from somewhere and it isn't their benefit because we all know that benefits only give you a basic amount to live off. Same with cars, if there is an expensive car registered to someone solely living on benefits, a check should be made on the finance: either they have a lump sum (not possible as savings are declared for benefits) or they have the car on finance (again where is the money coming from to pay the finance.).

They already can - excessive spending is a sign. It is collecting the evidence prior to that. Easier (especially for co-habiting) is to get evidence of things like cash withdrawals from cashpoints. I've seen a few cases where people swore they'd seperated & lived apart. Yet bizzarrely the alleged ex-partners seemed to withdraw their cash within 5 mins of each other from the same cashpoint at the end of her road!

MrEnglish

Reading this thread is the best advert to quit your job live on benefits and have a few kids.

StevieJ

lemonjelly wrote: »

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.

.

Don't think that is strictly true.

In some situations, the local authority may treat you as if you are not responsible for paying the rent, even though you have to pay it and you will not get Housing Benefit. This will be the case if you have a rental agreement the local authority thinks is ‘non-commercial’, for example, because it is not legally enforceable.
You may be excluded from Housing Benefit by this rule if you pay rent to a close relative who also lives in the home, or to a former partner for the home where you used to live together. It can apply if you pay rent to a company or trust that you have some connection with. It can also apply if you (or your partner) used to own the home and your ownership ended within the last five years. It can apply if you live in your home as a condition of your employment or your partner’s employment, or if you live there because you are a member of a religious order which provides you with your living costs.