Private Landlords to Evict up to 200,000 tenants because of benefits cuts

HAMISH_MCTAVISH

Ministers were also warned last night that the number of people classed as homeless in Britain could more than double because of "unfair" benefit cuts.

The National Housing Federation, the body representing England's 1,200 not-for-profit housing associations, predicts that impending cuts to housing benefit will put a further 200,000 people at grave risk of homelessness and lead to a concentration of social problems in the most deprived areas of the country.

Currently 140,000 people are classified as homeless in Britain.

The new government has unveiled plans to cut housing benefit by 10% for people claiming jobseeker's allowance for 12 months or more from April 2013. The cuts would hit Britain's 200,000 single, childless claimants hardest. Someone in London with a weekly rent of £350 would see their benefit cut by £35. The NHF said tenants would be forced to make up the shortfall from their £65.45 weekly allowance, leaving just £30.45 for food, clothing and energy.

"Cutting housing benefit could have a catastrophic impact on the lives of thousands of people who – despite their best efforts – have failed to find work after 12 months," said the federation's chief executive, David Orr. "These changes mean that up to 200,000 people could end up homeless. Quite frankly, the proposals are disturbing and unfair."

Critics also say plans to cap payments to private tenants and to reduce the level at which housing benefit is paid from 50% of local rent levels to 30% could force hundreds of thousands of families out of their homes.

Oh dear.......

Not as straightforward as some seem to think.

Concentrating all the benefits claimants that previously had access to 50% of housing stock, into just 30% of housing stock, will have some serious unintended consequences.

There is still a limited supply of housing.

Shuffling people from price point A to price point B does not create an overall surplus. Demand and rent/house prices will rise in the lowest priced 30% of houses, for sure.

Demand and price may or may not fall at the next bracket up, depending on how much money is diverted into rent from other things from those now unable to find a place in the bottom third.

If you're a current private renter of low cost housing, your "freedom and flexibility" to move will go out the window, as cheap places become as rare as rocking horse poo. You won't dare move. If your landlord decides to sell, you'll be screwed. If you need to move for a new job you'll be screwed.

If you're on benefits and get a cheap place, you won't dare move for the same reasons. Vacancy rates and voids at the bottom end will fall off a cliff, and prices below the 30th percentile will rise rapidly up towards it as demand outstrips supply.

Anyone with the ability to pay more will then be forced up the ladder.

Take the example of any one of the hundreds of potential FTB's that post on any of these boards, bragging about how much money they are saving by renting a cheap place and putting money away towards a deposit.

When they can no longer find a cheap place, because all the cheap places are full, because you've concentrated all the benefits crowd into just 30% of housing instead of giving them access to 50%, then some of the non benefits crowd who previously chose to live cheaply to save money will find they have no choice but to move up the ladder, spend more, and save less.

I don't doubt for a second this will cause some fluctuations around price in some parts of the country.

The cheaper areas will rise in price, as demand for them strengthens, the areas around the previous cut off price may fall, as demand for them weakens. Or may stay broadly the same, as prices in the bottom third rise and push up the median, and thus benefits allowances.

Low income workers renting for flexibility and not claiming benefits may find themselves trapped in their current rental, unable to move and have that flexibility for fear they won't get another place they can afford.

House prices at the top end are likely to rise, as streets or neighbourhoods become more desirable without benefits claimants living next door.

There will be unintended consequences.

There always are.

This is one of the biggest social experiments of all time. It'll be fascinating to see how it all pans out.

silvercar

I suspect that one of the unintended consequences will be that people claiming full HB will look for cash in hand jobs. With limited benefit, less housing allowance and an inability to get a job that pays enough to come off benefits, the choice will be between losing your home and finding some extra money.

vivatifosi

silvercar wrote: »

I suspect that one of the unintended consequences will be that people claiming full HB will look for cash in hand jobs.

Oh no! We'll be getting two for one pizza deals through our letterboxes as well as in our inboxes.

HAMISH_MCTAVISH

silvercar wrote: »

With limited benefit, less housing allowance and an inability to get a job that pays enough to come off benefits, the choice will be between losing your home and finding some extra money.

Expect an upsurge in drug dealing and prostitution then....

vaporate

HAMISH_MCTAVISH wrote: »

Expect an upsurge in drug dealing and prostitution then....

Desperate times...

HAMISH_MCTAVISH

vaporate wrote: »

Desperate times...

As I said, this is one of the biggest social experiments of all time.

It'll be fascinating to see how it all pans out.

My money is on one of the biggest population migrations in UK history, as the poor are forced out of "nice" areas and into the ghettos.

Which would certainly be the resumption of a proven pattern for the Tories..... Dame Shirley and the Westminster gerrymandering scandals weren't all that long ago.

brit1234

HAMISH_MCTAVISH wrote: »

Expect an upsurge in drug dealing and prostitution then....

Or landlords can drop there prices. We all know that landlords like Ajay Ahuja openly promotes raping housing benefit to his members.

The buy to let boom forced up housing benefits as landlords need ever bigger rents to cover the ever skyward property costs.

Its time to go back to normal. Why should the tax payer fund landlords greed.

PasturesNew

I looked earlier today to see if there was anywhere I felt comfortable affording. Stretched the search out to the whole of my county, but none were what I call affordable. LHA pays 25% more than what I currently look to be affordable.

tartanterra

If this report is accurate, then standby for a boom in HMO's.

silvercar

brit1234 wrote: »

Or landlords can drop there prices.

They could, and I suspect that those playing with BTL as a way of funding their retirement will do so. They won't be bothered about a small drop in income if they either don't need that income at the moment or are more concerned with long term capital growth. Those landlords for whom this is their only business or those renting out their own property because they can't afford to sell, will want to maximise the rent. It is they that are the "experiment" - do they ditch the HB tenants and hope to find a private tenant able to pay the full rent or do they stick to the existing tenant to avoid a void and accept ever increasing arrears?

carolt

I think that what Hamish's OP forgot is that whilst it may be good times ahead for those offering cheap and cheerful rentals in the bottom 30% of the market, it will be desperate straits ahead for the remaining 70% of the market.

They - by definition the large majority - will now face long voids and a desperate search for a private tenant who can foot the bill. Making people like me, say, like gold dust. As we no longer have to compete with the unwaged. Meaning that it becomes much easier for us to find a rental at our current price - forcing canny (or desperate) landlords to put down the price/up the quality to attract us.