Housing benefit reforms really this much of a problem?

grizzly1911

ukcarper wrote: »

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.

Can you clarify what you are saying I don't follow.

Going4TheDream

Graham_Devon wrote: »

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.

Of course not, he has modelled his business plan on being 'guaranteed' payments, and has very likely grown his portfolio based on this regular guaranteed (growing) income.

The locations where his houses are are generally unemployment black spots, so it would follow that a high number of his tenants would be very likely benefits claimants.

The cost of property in those areas is very low and the rental yield high is high compared to other regions. (bases on cost/versus rent)


I am sure he has been well aware of these much talked about changes for as long as they were first announced.....I wonder what he has done to minimise bad risk since then?

PasturesNew

This is what being in business is about - taking risks and knowing how the maths works out and having Plan B etc.

If he's got a problem his maths must be wrong and instead of down-leveraging he's over-leveraged.

ukcarper

grizzly1911 wrote: »

Can you clarify what you are saying I don't follow.

LHA (housing benefit for private tenants) is paid to tenant. Housing benefit (social housing) is paid to landlord.

HAMISH_MCTAVISH

Graham_Devon wrote: »

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.

From another article on this topic today....

A trial of the system in Torfaen among social housing tenants found arrears rose from around £20,000 to almost £140,000 in seven months.

http://www.southwales-eveningpost.co.uk/Millionaire-landlord-Kevin-Green-fears-benefit/story-20052669-detail/story.html#ixzz2k55zzS2S

Now you can try and spin it any way you want to, but it seems clear a significant number of these claimants simply cannot properly manage money under those circumstances.

This story is not about reductions in benefits.

Nor is it about a landlord being "over leveraged".

It's very simply a story about what happens when changes to the way benefits are paid results in a large percentage of those claimants failing to spend their money on the service it's being provided for.

In any business, you make reasonable assumptions about non-payers. All landlords do this.

But what any prudent businessperson would do, when faced with the possibility of your customer default rate spiralling by 700% in 7 months, is draw attention to the providers of those funds (in this case government and taxpayers) that it is likely the recipients will abuse the system and cause an even bigger problem if these ill thought out changes go ahead.

Going4TheDream

HAMISH_MCTAVISH wrote: »

From another article on this topic today....


http://www.southwales-eveningpost.co.uk/Millionaire-landlord-Kevin-Green-fears-benefit/story-20052669-detail/story.html#ixzz2k55zzS2S

Now you can try and spin it any way you want to, but it seems clear a significant number of these claimants simply cannot properly manage money under those circumstances.

This story is not about reductions in benefits.

Nor is it about a landlord being "over leveraged".

It's very simply a story about what happens when changes to the way benefits are paid results in a large percentage of those claimants failing to spend their money on the service it's being provided for.

In any business, you make reasonable assumptions about non-payers. All landlords do this.

But what any prudent businessperson would do, when faced with the possibility of your customer default rate spiralling by 700% in 7 months, is draw attention to the providers of those funds (in this case government and taxpayers) that it is likely the recipients will abuse the system and cause an even bigger problem if these ill thought out changes go ahead.

Yes all above may be true, but changes to benefits were announced in 2010, that is 3 years ago.....has it really taken this business man all that time to realise that it may affect his business model? If that was me I would have been number crunching from day one, not leaving it until its all about to happen, then cry about it

I would still ask what has he done to reduce his exposure in that time if he sees it as a huge problem to him...... clearly nothing?

CLAPTON

there was thread recently that mentioned that some landlords won't accept people on housing benefit

there was the usual split between those that thought this immoral and those that thought this prudent

Graham_Devon

HAMISH_MCTAVISH wrote: »

It's very simply a story about what happens when changes to the way benefits are paid results in a large percentage of those claimants failing to spend their money on the service it's being provided for.

I have to disagree. It appears this is what you want the "story" to be or how you have read it and imagined it to be.

This "story" as you put it, can only be read due to the exposure the landlord has. You cannot ignore that part of the "story".

As ILW stated. If they fall into arrears, he starts proceedings and get's his house back.

But in this case, he is STILL left with a problem, even without the benefits claimant using his services. So it goes far further than you wish to explore.

ukcarper

LHA is paid to tenant except in exceptional circumstances and I believe UC will be the same so I can't understand the landlords point.

vivatifosi

Graham_Devon wrote: »

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.

To be fair to the BBC, I've heard this discussed at length on R4. This is an issue for many landlords, not just the one in the article. If it isn't addressed, landlords will shy away from social renting options as too risky, which will mess up supply even more. Not good.