A little time bomb under UK buy-to-let housing - Maybe

Generali

https://medium.com/bull-market/the-overall-benefit-cap-a-little-time-bomb-under-uk-buy-to-let-housing-9575030792d3

A very interesting piece.

Basically the argument goes, under the benefits cap, out of work payments and child payments are fixed so the only thing that can be cut is housing benefit.

The author goes through the numbers in quite an interesting way (and I'd be fascinated to see how this would impact different specific areas).

Anyway, I enjoyed it and the writer does make one very good point is that if we know one thing about the housing market for rentals in the UK, prices tend to be very sticky.

purch

It does appear that it will be Social Landlords and HA's that will be most affected, as one would presume that a greater proportion of their stock is let to tenants claining HB.

With the recent moves to normalise rent levels for social housing to closer to the open market levels, I doubt that many 3 bed social housing properties have a weekly rent below £100 anywhere in the country.

wymondham

Well written article - even I understood that, thanks Gen!

buglawton

Well at least it's a frank admission that the taxpayer currently shores up house prices via subsidies. Never mind just the prospect of house prace falls in many locations, the sharper benefits cap may actually result in a mini recession in some regions.

antrobus

Generali wrote: »

.....A very interesting piece.

Basically the argument goes, under the benefits cap, out of work payments and child payments are fixed so the only thing that can be cut is housing benefit.....

That is not an 'argument'; it is drawing attention to a design feature.

How is the money taken back if an individual's benefits exceed the cap? Individuals in this situation lose some of their Housing Benefit, which is paid to help people with their rent.

http://www.bbc.co.uk/news/business-23313989

IveSeenTheLight

Generali wrote: »

https://medium.com/bull-market/the-overall-benefit-cap-a-little-time-bomb-under-uk-buy-to-let-housing-9575030792d3

A very interesting piece.

Basically the argument goes, under the benefits cap, out of work payments and child payments are fixed so the only thing that can be cut is housing benefit..

I'd be interesting to see some stats on the the percentage of BTL's rented by people on benefits.

I've never had a need to rent to people on benefits.

To that end, understanding the split may lead to being able to understand the potential "timebomb" impact or is it just normal journalism exaggerating the impact to maximise the news

purch

IveSeenTheLight wrote: »

I'd be interesting to see some stats on the the percentage of BTL's rented by people on benefits.

I'll start.

Zero.

Generali

IveSeenTheLight wrote: »

I'd be interesting to see some stats on the the percentage of BTL's rented by people on benefits.

I've never had a need to rent to people on benefits.

To that end, understanding the split may lead to being able to understand the potential "timebomb" impact or is it just normal journalism exaggerating the impact to maximise the news

Well he does make the point at the end that rents in the UK are very sticky. He does have to drive people to view what he writes and this is how people do it.

I guess if you are doing BTL in Chelsea or the City you'll have very few HB customers. If you're doing the same in Hastings or Hull you'll likely have a higher proportion.

mwpt

purch wrote: »

I'll start.

Zero.

"26% of households in London received housing benefit in 2012"

It may not be you, but somewhere, BTLers are letting housing to people receiving housing benefit. Supply/Demand equation is changed if you remove money from the demand side.

pjread

I thought HB was typically paid to the claimant these days, so potentially a LL might not actually know their tenant is claiming HB?

antrobus

purch wrote: »

I'll start.

Zero.

I'll raise that to 32.51% in November 2014.:)

Source: DWP Table 4: Housing Benefit claimants by tenure: November 2008 to November 2014