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Housing benefit reforms really this much of a problem?
Graham_Devon
Posts: 58,560 Forumite
One of the UK's biggest (in terms of properties!) landlords has suggested he may have to go bust if the welfare changes come through.
He has 764 properties, with 60% let to welfare claimants.
Up until now, he's enjoyed direct payment, but suggests if the welfare reforms go ahead as planned, he may be forced to sell up and pull out.
Now, this raises a question which the BBC don't cover.
Where does the problem lie here? Is it the welfare system, or maybe that he has exposed himself so much that he can't reduce rents even after all this time and therefore may go bust?
We have to bear in mind that this is probably a bit of a threat from him at the same time. Whether he would actually need to go bust we might never know.
My thoughts on it is that if he cannot function without ever increasing welfare payments, he's simply over exposed, rather than it being a problem with the welfare system itself?
http://www.bbc.co.uk/news/uk-wales-politics-24860574
He has 764 properties, with 60% let to welfare claimants.
Up until now, he's enjoyed direct payment, but suggests if the welfare reforms go ahead as planned, he may be forced to sell up and pull out.
Now, this raises a question which the BBC don't cover.
Where does the problem lie here? Is it the welfare system, or maybe that he has exposed himself so much that he can't reduce rents even after all this time and therefore may go bust?
We have to bear in mind that this is probably a bit of a threat from him at the same time. Whether he would actually need to go bust we might never know.
My thoughts on it is that if he cannot function without ever increasing welfare payments, he's simply over exposed, rather than it being a problem with the welfare system itself?
http://www.bbc.co.uk/news/uk-wales-politics-24860574
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Comments
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What I don't understand in article it says housing benefit is already paid direct to private tenants so what difference will UC make.0
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Graham_Devon wrote: »One of the UK's biggest (in terms of properties!) landlords has suggested he may have to go bust if the welfare changes come through.
Oh for heavens sake Graham.
He is (quite rightly) noting that welfare claimants financial management skills tend to be poorer than those of the general population.
As the article notes....A private sector landlord with more than 700 homes says benefit changes could put his business at risk.
Carmarthenshire-based Kevin Green fears tenants will fall behind on their rent when a new system of paying benefits is introduced.
He says he may have to stop letting to people on welfare.
"What we're finding is if rent payment is put in the tenants' hands they are not being taught in school or further education to run a home and they just can't budget," he told BBC Wales Sunday Politics.
"And it's going to lead to huge arrears. It could lead to us going bust at the end of the day and not providing homes for less fortunate people as well."
He added: "If we pull out the market that's hundreds of houses that we rent out in this area that's pulled out.
"We're the UK's largest private sector landlord. We pull those out of the social welfare market and that's houses that people haven't got to live on housing benefit."
In classic 'Mr Muddle' style, your OP made no reference to the fact that it's not reductions in welfare or housing benefit causing the issue.
But rather it's the chaotic lifestyles and poor financial decisions of the claimants, who might choose to spend their rent money on other things if it's paid directly, that is the threat.
Seriously.... one of the worst threads you've dragged across here from hpc in a while. And that's saying something.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
And here we go again, by post 3, it's attacking and insulting.
If you believe that the majority of welfare claimants lead chaotic lifestyles and are unable to make financial decisions, that's your choice and you can put it down to that. I purposly didn't bring that into the discussion as it's clearly inflamatory, and not even true.
My thoughts are that he should be able to take a hit without having to go bust. As I stated, it's simply not true that everyone on benefits live chaotic and less intelligent than others not on benefits. The landlord has a VI and doesn't want the system to go this way. I'm exploring the actual system and whether it's welfare or the setup for the landlord that means he faces going bust should anything change.0 -
If they don't pay their rent (which is given to them) kick them out. What is the problem?
Are most of his tenants subnormal or something?0 -
If they don't pay their rent (which is given to them) kick them out. What is the problem?
Are most of his tenants subnormal or something?
It is a problem because the delicate earnings cash flow is disrupted prompting voids in the revenue. This could make or break the profit on a single property if it is highly leveraged.
Please think before posting.0 -
From Grahams interesting post. I think it mentioned a lady living with 9 children in a 4 bed house. So if the benefit cap is £500, is that to cover everything, rent, council tax and so on? Tbh, that would be a struggle. Not saying that having all those children was a prudent move.
Oh yes Hamish, I think your statement regarding peoples lives was pretty insulting. Not surprised though.0 -
What I don't understand in article it says housing benefit is already paid direct to private tenants so what difference will UC make.
At the moment payment is made specifically as housing benefit, under UC claimants get a payment to cover everything with it not being earmarked for specific items, the thinking is that they will see it as their money and re allocate housing money elsewhere.
Eta
News items i have seen of the trial areas have seen increases in arrears, some quite large rises in arrears.0 -
From Grahams interesting post. I think it mentioned a lady living with 9 children in a 4 bed house. So if the benefit cap is £500, is that to cover everything, rent, council tax and so on? Tbh, that would be a struggle. Not saying that having all those children was a prudent move.
Oh yes Hamish, I think your statement regarding peoples lives was pretty insulting. Not surprised though.
Insulting, no. Honest, yes.
The denial is suffocating.0 -
If they don't pay their rent (which is given to them) kick them out. What is the problem?
Are most of his tenants subnormal or something?
Kicking them out would lead to the very same conlusion, none payment of rent.
He'd then have to find someone else to rent the place. Which is OK for a handful, but not when you have 764 properties in a local area with 60% of them rented by welfare claimants.
Hence why I'm asking if this is a problem he has created for himself. If he's reliant on welfare payments for 452 of his 752 properties, surely he was always exposed and maybe always liable to fall over should the welfare system ever change? This is only exacerbated by the fact that many of his properties are in close proximity to one another. Finding private tenants to rent all these houses, or even just 20% of them wouldnt be a walk in the park.
Some on here talk of how private landlords have picked up the can in place of social housing. However, this isn't really true if you look at such a case. Social housing would not face this mess.
He will likely be absolutely fine. No ones going to let him go bust in reality, but at what cost to the rest of us considering so much tax payer money has been put into this already through housing benefit?
I don't think private landlords can ever take over social housing, due to the required profit element and, to put it bluntly, greed in these cases meaning every increasing leverage.0 -
At the moment payment is made specifically as housing benefit, under UC claimants get a payment to cover everything with it not being earmarked for specific items, the thinking is that they will see it as their money and re allocate housing money elsewhere.
Eta
News items i have seen of the trial areas have seen increases in arrears, some quite large rises in arrears.
They have the money in their bank account so not much different really using default rate on social housing which was paid direct to landlord is not a good comparison.0
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