Housing benefit cuts to affect 75% of landlords

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16th November 2011

Housing benefit cuts to affect 75% of landlords

A survey by the National Landlords Association (NLA) has found that Government caps on housing benefit payments could force over three quarters of landlords out of the Local Housing Allowance (LHA) market.

The survey found 77 per cent of landlords who have LHA tenants are either considering or already taking steps to reduce their involvement in the LHA market.

One quarter of respondents say they are already reducing the number of tenants they have on housing benefit payments, while half plan to do so in the future.

The changes see benefits based on the 30th percentile of local average market rents, rather than the previous 50th percentile. The caps limit the maximum benefit available based on the property size.

NLA research has found the LHA cuts will have a varied impact on families across the country, with some losing hundreds of pounds. Government figures show nearly 1.3 million households currently claim LHA across the UK.

Some examples of how the caps will reduce LHA payments, based on rates from March 2011 before the cuts began in April, are:

• A one bedroom flat in Willesden, north-west London: Before the cap, the rate was £275 per week, now it is £250 per week – a £25 cut per week.

• A five bedroom house in Guildford, Surrey: Prior to the cap, a family would have received £691.15 per week, now it is capped at the four bedroom rate of £400 per week – a £291.15 cut.

David Salusbury, NLA Chairman, commented: “The shortage of housing across the UK is putting even greater pressure on the private-rented sector. Capping housing benefit payments at this time will only lead to more people struggling to pay their rent.

“The Government must monitor the impact of the roll out of LHA caps. It is essential that tenants are not left at risk and that landlords can continue to provide this accommodation for the more vulnerable in society.

“The number of people claiming benefits continues to rise, and these caps could result in fewer affordable rental properties for benefit claimants.”