Growth in private rented sector will stoke housing benefits bill, claim

Growth in private rented sector will stoke housing benefits bill, claim

The growth in buy-to-let is fuelling a rise in the amount of public money being spent on housing benefit – money which could be better spent on building new homes.

The GMB union says that the latest growth in buy-to-let lending will equate to 16,000 more private tenants claiming Local Housing Allowance because they cannot afford private rents.

The union has also hit out at the number of buy-to-let landlords who now own ex-council houses bought under Right to Buy.

It says it knows of one landlord who owns nearly 100 such properties – and who is having the rent bill largely picked up by taxpayers.

The Council of Mortgage Lenders says that 40,000 mortgages worth £5.1bn were advanced to buy-to-let investors in April, May and June.

The GMB says that just over four in ten private tenants – 40.4% out of 3.9m households – are already receiving housing benefit. The figure ranges from 51.5% in the North-East to 34.4% in London.

The GMB argues that if half of last year’s housing benefit bill were to be spent on house building, 80,000 new homes could be delivered each year.

Paul Kenny, GMB general secretary, said: “This growth in buy-to-let lending will give rise to even more claims for housing benefit to pay the rents. Taxpayers already pay rent to private landlords owning more than 1.5m dwellings and this latest growth will likely add another 16,000 new claimants.

“Housing benefits to meet housing costs for people in rented accommodation on low incomes is a Thatcher Tory policy. The cost has ballooned to £23bn per year.

“Over the past 30 years, a huge slice of the £411bn of taxpayers’ funds spent on this Tory policy has been funnelled to private landlords as ‘corporate’ welfare.

“Labour’s traditional and more cost-effective policy of building good-quality houses to let at affordable rent for those on low incomes was ditched. Much of the stock of social housing that was sold off is now in the hands of private landlords.

“In Wandsworth, for example, there are 977 private landlords who own more than one of the 6,180 ex-council leasehold homes sold under Right to Buy which are now owned by buy-to-let landlords.

“One private landlord owns 93, another owns 32, another 15 landlords each own 10 or more, and a further 83 landlords each own between five and nine of these dwellings. Many of their tenants are in receipt of housing benefit rather than being charged affordable rents.

“Public funds should be switched to investment in social housing and away from this failed expensive Tory policy of corporate welfare and private greed.

“Half the cash spent in Britain on housing benefit last year would fund over 80,000 new homes each year across the country.

“GMB wants a Labour Party election manifesto insisting that councils build new homes to let at affordable rents all across the country.

“There are 177,000 new housing units in the capital with planning permission in place but where the development has stalled.

“The mayor Boris Johnson knows the problem but he is he doing nothing about it.

“GMB want an incoming Labour government to use compulsory purchase order powers to build social housing if these developments are not started within six months of the election.”