Changes to Housing benefit how much will rents fall?

drc

carolt wrote: »

So who do you think will rent all the £400+ houses once they move? And at what price?

Perhaps a lot of the people who live in the suburbs and actually work and pay their rent will move further into London if prices drop. I know we would consider it (no way we could afford it atm). That would free up properties in the suburbs which (if demands was high enough) would push rent prices up so all those families on LHA leaving central London would gravitate to the outer boroughs but may still not be able to afford to live in London if that causes rents to rise.

Will be interesting to see what happens.

We need a maths expert who can create some sort of graphs to show all the different variables and scenarios .

LydiaJ

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

Only in areas where more than 30% of rental properties get LHA. In areas where 70% or more of rentals are private, then the bottom 30% can drop as much as they like without changing the value of the 30th percentile.

Not being (or ever having been) a Londoner, I'm afraid I have no idea how many London boroughs have rental markets with more than 30% of properties on LHA. People on here seem to have wildly differing opinions about several questions of that kind, which leads me to suspect that accurate and impartial data on the subject is not easily googleable. Besides which, I'm tired and I've had two very long and pressurised days, and I'm going to leave it to somebody else to look it up. Sorry!


ETA

drc wrote: »

We need a maths expert who can create some sort of graphs to show all the different variables and scenarios .

Oooh yes please!

The posts on this thread that I find the most convincing are the ones that consider several views and come to the conclusion that we haven't a clue how all the dynamics of this change are going to unfold, but it's certainly going to be very interesting for sad people like us who are interested in that sort of thing. I foresee many happy hours debating it on here as developments occur over the next few months and years. :beer:

silvercar

drc wrote: »

We need a maths expert who can create some sort of graphs to show all the different variables and scenarios .

As a statistician I can tell you there are too many variables and too many scenarios. Statistics can be used to show virtually anything.


You possibly need a psychologist to decide how people will react when they realise they can't meet their commitments.

chewmylegoff

74tnemele wrote: »

What about more than 4 bedrooms?

Some foreign families on benefits have several children.

the ludicrous claims for 7 bedroom houses in inner london are going to come to an end, that looks pretty obvious. but those are a tiny minority of claims. will have a more noticeable effect on the content of the daily mail than the housing market.

chewmylegoff

carolt wrote: »

So who do you think will rent all the £400+ houses once they move? And at what price?

it would be interesting to see how many LHA claims in london relate to 4 bedroom houses. i suspect it isn't that many, but i just don't know.

whatever happens, it will still be astronomically expensive to rent or buy a 4 bed house in inner london.

Shakethedisease

chucky wrote: »

....... effective demand

according to many on here - the whole of the London rental market is supported by Housing Benefit. it's complete cobblers IMHO.

I do apologise, I've sadly discovered the discussion time forums here are a good read lol.. But it seems reading back on this thread I got my last set of figures wrong.. ( thanks Chewmylegoff ).. I said 2/3rd's were claimants in Camden when it actually meant 2/3rds of claimants.. sorry !

However...

Claims have risen in the recession to the point where 42 per cent of homes in Hackney and 38 per cent in Tower Hamlets are reliant on the weekly payment. In Greater London as a whole, a quarter of households rely on the benefit to meet their rent.
That is far higher than the national rate, at 18 per cent, and significantly above the next highest region, the North-East, where 22 per cent of families claim housing benefit.

http://www.thisislondon.co.uk/standard/article-23763489-40-percent-of-london-families-receive-housing-benefit.do

Those figures above probably haven't went down much since last Sept ? That's still a LOT of tenants being 'capped'.

ps Slightly off topic but has anyone saw this thread where the dwp letters are starting to go out..and a lot have been unaware there WERE changes in the budget this year to SMI.. letting people know that they'll be losing xx amount per week on mortgage interest payments from the beginning of this October (ie 2 weeks from now) ?

https://forums.moneysavingexpert.com/discussion/2729813

A lot of very scared and very unprepared people out there if what I've read online ( not just here ) is anything to go by. And not much they can do about it either.. Repossessions will rise also do you think ?

des_cartes

It is the aim of the coalition government to reduce spending on benefits over the next 5 years. Pouring money into housing benefit is counterproductive as all it does is increase rents and house prices. Government action to reduce housing benefit over the next 5 years is designed to reduce rents and house prices in order that the saving of this wasted money can be chanelled into wealth creation. In the same way that housebuyers were being adversely affected by government policies that saw wealth as house price debt under Gordon Browns pyramid housing scam, housebuyers will now benefit from a government that sees house price debt as an obstacle to economic recovery. What goes around comes around.

chewmylegoff

Shakethedisease wrote: »

I do apologise, I've sadly discovered the discussion time forums here are a good read lol.. But it seems reading back on this thread I got my last set of figures wrong.. ( thanks Chewmylegoff ).. I said 2/3rd's were claimants in Camden when it actually meant 2/3rds of claimants.. sorry !

However...

http://www.thisislondon.co.uk/standard/article-23763489-40-percent-of-london-families-receive-housing-benefit.do

Those figures above probably haven't went down much since last Sept ? That's still a LOT of tenants being 'capped'.

http://www.londoncouncils.gov.uk/London%20Councils/LHAbriefingFINAL.pdf

figures produced by "london councils" say over 1/3 of the 650,000 privately rentals are in receipt of housing benefit, so approx 215,000. however, of those only 18,645 will be impacted by the new caps. so the 40% number is kind of irrelevant, it's 2.8% of private rentals in london which will be affected by the caps. there are some boroughs were all of the current LHA rates for all property types are below the proposed caps.

westminster looks like it might be carnage though, over 4,000 affected claimants. i don't know how many rental properties there are in westminster but if you assume the 650,000 rental are evenly spread over the 33 boroughs, then there would be 20,000. that would mean 20% of all private rentals. rents are going to come down there.

Shakethedisease

Hi, that sounds awfully low.. Are you taking into account lha being reduced to 30 per cent of current median levels ? Only 2.8 per cent of private tenants being affected across the whole of London by this change seems very unlikey ... Unless I've missed somerthing else. But are your figures focusing purely on tne £400 a week cap and not also rents being reduced to the 30 th percentile locally too. ?

LydiaJ

chewmylegoff wrote: »

http://www.londoncouncils.gov.uk/London%20Councils/LHAbriefingFINAL.pdf

figures produced by "london councils" say over 1/3 of the 650,000 privately rentals are in receipt of housing benefit, so approx 215,000. however, of those only 18,645 will be impacted by the new caps. so the 40% number is kind of irrelevant, it's 2.8% of private rentals in london which will be affected by the caps. there are some boroughs were all of the current LHA rates for all property types are below the proposed caps.

westminster looks like it might be carnage though, over 4,000 affected claimants. i don't know how many rental properties there are in westminster but if you assume the 650,000 rental are evenly spread over the 33 boroughs, then there would be 20,000. that would mean 20% of all private rentals. rents are going to come down there.

Fascinating link, chewmylegoff - thanks.

One thing that struck me was from the graph comparing different areas of London with other bits of the country. Outer London isn't significantly more expensive than Oxford or Reading. I didn't know that. (I've never lived in London, but lived in Oxford in the 1990s and still have friends there now, so this gives me a point of reference for outer London housing, to compare with the experiences of my current London friend, who is renting in zone 2.)

Those huge differences between different areas of London that really aren't that far distant from each other have got to have some effect on making people move from one area to another. It's going to be really interesting to watch this unfold.