Changes to Housing benefit how much will rents fall?

chewmylegoff

carolt wrote: »

Oh come on, just walk around some areas of London and compare local rents to the people you see walking around you - there are so many areas where it is clear the average local esp recent arrival (ie not pensioners who may have bought years ago when it was cheap) could not possibly afford to pay local rents if they had to pay them fully themselves.

It's blatantly clear that local rents have been supported at unrealistic levels in recent years. Only someone who walks around London with their eyes shut could think otherwise.

this ignores the fact that there is quite a lot of social housing in london which is mixed in amongst the more expensive housing, and cheap and expensive areas for private housing are often very close together. take clapham, where i used to live, as an example.

if you want to live in the nicer areas e.g. around the common, between the commons, it is going to cost you. if you want to live in an ex-LA flat in a large block it is not going to cost you anywhere near as much. if you live in stockwell or brixton and live in a shoddy ex-LA then your rent is going to be as much as 50% lower than you would pay for somewhere decent on a nice street in clapham.

you'll still see these people walking down the street, even if the ones who currently get LHA for a nice house on a nice street in clapham (which is probably the vast minority) are forced to move half a mile away by having LHA rates slashed.

silvercar

ILW wrote: »

Demand is determeined by wish and ability to pay, the cheaper areas will hit a ceiling based around the reduced LHA levels, which may in future years cause LHA levels to be reduced further. Bloody marvelous.

The effect will obviously be gradual but everytime rents drop as a result of the reduction in LHA, the 30th percentile drops. Everytime the 30th percentile drops, rents drop.......

...until landlords sell up, no-one provides private rental properties to LHA claimants and a lot more are housed in B&B etc

silvercar

How about areas where most renters are paying their own rent with a proportion of LHA claimants, say 20% rely on benefits to afford their rent, something they can afford to do because they are in receipt of a lot of benefit and can afford to pay some of their non rent benefits to support their LHA. They suffer a loss in income and move to cheaper areas (gradually obviously). With virtually no claimants in the area, the area becomes more gentrified and improves, the area becomes more desirable and rents increase.

ILW

silvercar wrote: »

The effect will obviously be gradual but everytime rents drop as a result of the reduction in LHA, the 30th percentile drops. Everytime the 30th percentile drops, rents drop.......

...until landlords sell up, no-one provides private rental properties to LHA claimants and a lot more are housed in B&B etc

Or to put another slant on it, when landlords sell up it will put more properties on the market, this will force prices down in the area and some of the people currently on lHA supported rents will buy the houses, thereby freeing up the remaining rental properties.

ukcarper

So you really think a £500,000 plus house in London will drop enough for someone on LHA to buy it.

ILW

ukcarper wrote: »

So you really think a £500,000 plus house in London will drop enough for someone on LHA to buy it.

Unlikely, but it may get someone to sell their £200k house and free that up for someone who is getting LHA.

chewmylegoff

ILW wrote: »

Unlikely, but it may get someone to sell their £200k house and free that up for someone who is getting LHA.

in the areas that are going to be significantly affected by the LHA caps, the only properties that are going to be available for £200k or less are houseboats, 1 bed flats or studios. I should think the vast majority will be studios. Since a majority of households receiving LHA in london (over 14,000 out of 18,000 claimants) have children it seems unlikely that there will be any significant effect.

ILW

chewmylegoff wrote: »

in the areas that are going to be significantly affected by the LHA caps, the only properties that are going to be available for £200k or less are houseboats, 1 bed flats or studios. I should think the vast majority will be studios. Since a majority of households receiving LHA in london (over 14,000 out of 18,000 claimants) have children it seems unlikely that there will be any significant effect.

True, £200k houses are not going to be affected by the cap, but they may be affected by the 30% rule.

chewmylegoff

ILW wrote: »

True, £200k houses are not going to be affected by the cap, but they may be affected by the 30% rule.

possibly, we'll have to see, but i'm not sure there will be any particular effect on a £200k property which is already at the bottom end of the market.

a decent 1 bed in most affected areas already costs far more than £200k, the ones that cost £200k or less are already the dregs. it follows to reason that the rental value of a one bed flat that is worth £200k is probably already at, around or even below 30% of the median rent for a 1 bed property in those areas.

ILW

chewmylegoff wrote: »

possibly, we'll have to see, but i'm not sure there will be any particular effect on a £200k property which is already at the bottom end of the market.

a decent 1 bed in most affected areas already costs far more than £200k, the ones that cost £200k or less are already the dregs. it follows to reason that the rental value of a one bed flat that is worth £200k is probably already at, around or even below 30% of the median rent for a 1 bed property in those areas.

Not south of the river.