Thousands of vulnerable families will lose their homes under government reforms of the Housing Benefit system announced in yesterday’s Budget.

Chancellor George Osborne has said that maximum rates of Local Housing Allowance will be reduced to between £280 per week for a one-bedroomed property to £400 for a four or more bedroomed house.

There has been no indication of any local weighting given, so tenants in London and the south east will be hardest hit by the new cap. James Davis, Upad’s CEO, who also lets to tenants on Housing Benefit, explains what this will mean in practice:

“I have a property in north-west London on which I’d lose £500 a month under these proposals, and another in Westminster where I’d lose £1500. I believe in letting to social tenants – but not at the expense of my income, and not when I can earn a significantly higher amount from private tenants.”

Another landlord, Nick Parkin from Pimlico Flats, gives it to the Chancellor straight: “if you think that landlords are going to rent to DHSS tenants at less than they can rent to private tenants you haven’t got the hang of a market economy yet.”

James continues: “Landlords do at least have a choice how they’ll react to the Chancellor’s announcement. For many social tenants, this is going to mean a forced move away from home, family and schools. Tenants on benefits are going to be forced into ‘social housing ghettos’, in areas with cheaper housing that’s less well looked after.

Of necessity, social tenants will be housed at the bottom end of the market because fewer landlords will have any incentive to brave the benefits system. Families will be forced back into B&B accomodation and social housing will become not fit for purpose. Are we going to see people housed in tents in the Olympic stadium?!”

The changes come into force from April 2011. We’re calling on the government to reconsider the detail of Slasher Osborne’s polices here. There is already a massive shortage of social housing in the UK: 4.5 million people are on the waiting list to be housed, and current local authority stocks can house less than half of them.

With no money for new buildings, only the private sector can offer these people a home. Landlords cannot let at a loss, nor will they deal with the bureaucratic and slow benefits system without some kind of incentive. At the very least, the government needs to add local weighting back into the mix.

Mr Shapps, are you listening?

In a bold first Budget, chancellor George Osborne made his mark with major reforms, sweeping away much of the benefit dependency culture and changing the social landscape of both taxation and benefits.

Lorna Bourke, www.citywire.co.uk – 22 Jun 2010

Wealthier families who have been able to claim Child Tax Credits, payable to parents with incomes of up to £58,000, will suffer benefit cuts while nearly a million on lower incomes will be taken out of the tax net altogether as the personal tax allowance is raised £7,475 from next April, an increase of £1,000 worth £200 a year to a basic rate tax payer.

During his time as chancellor, Gordon Brown had gone to great lengths to make us all ‘clients of the State’ with the introduction of tax credits for families with incomes well over the national average of around £25,000 a year – in the hope that we would vote to keep him in office.

Most of this is being swept away with the income level for eligibility for tax credits cut to £40,000 a year and an estimated two million families will lose benefits. These are worth as much as £545 a year for a family with two children and an income of £50,000 a year. The earnings disregard will also be reduced from its current level of £25,000 to £10,000 a year. But there will be an increase in the child element of tax credit for those on the lowest incomes.

Osborne is very keen to be seen to be fair so there is belt tightening across the board. Everyone will pay more for goods and services as a result of the increase in VAT to 20% which takes effect from January 4th 2011. This raises over £1 billion a month or around £13 billion a year – a significant contribution to reducing the government’s deficit of £155 billion.

But there was a sigh of relief as the tax net was not widened to include food – the biggest single item of expenditure after housing costs for low income families. To a large extent VAT is a voluntary tax – if you don’t spend on goods and services, you don’t pay it, so many ordinary families will escape this higher tax.

As expected, Capital Gains Tax is increased from midnight tonight to a flat rate of 28% – but only for those paying higher rates of income tax. Basic rate taxpayers will continue to be liable at the existing rate of 18%. There are concessions for entrepreneurs who will be able realise the first £5 million of gains at a flat rate of 10% compared with the current threshold of £2 million.

The tax net has not been widened and the Chancellor confirmed that the annual exemption of £10,100 (2010-11) will remain in place so those who benefit from Save as You Earn will not be penalised. The losers are those intended to suffer – the hedge fund and private equity managers who pay themselves in profits which until today were taxed at just 18%. Now they will have to pay tax at 28% on their profits.

Child Trust Funds have been abolished and Child Benefit, the universal tax free benefit paid to all parents at a rate of £20.30 a week for the first child and £13.40 a week for subsequent children is to be frozen for the next three years. Child Benefit was introduced in 1977 by a Labour government and official statistics show that some 7.5 million families receive Child Benefit in respect of 13 million children at an annual cost to the Exchequer of over £7 billion a year and rising. Until now annual increases were index-linked.

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Ovenu, the professional oven valeting franchise, is urging landlords to clean-up their act over the summer break to prevent potentially fatal fires caused by dangerous dirty cookers.

Photo: Rik Hellewell

The lives of students in rented accommodation could be at risk if unscrupulous landlords leave grease and grime to fester for months until the appliance is turned on again in September.

The cause and effects of an oven fire are similar to a chip pan or deep fat frying fire, which are two of the more well-known kitchen-based accidents.

Statistics released this month by the Department of Communities and Local Government revealed that two-thirds of all fire fatalities that occurred between April and September of last year were as a result of accidental fires in the home.

According to the 2007 Fire Statistic report released by the same department in August 2009, the main source of ignition for accidental fires in the home was cooking appliances (55 per cent or 23,815 accidental fires).

As scores of students leave their accommodation for the end of the university year, landlords are being urged to take the opportunity to prevent the risk of fire by ensuring that appliances are deep cleaned.

Rik Hellewell from Ovenu said: “The facts are there, the number of fires caused by ovens should be a major warning to landlords that an unclean cooker can lead to serious injury or even death.

“Student landlords may think that they have spruced-up the property but the build up of fat or oil inside the oven could have far greater consequences than a dirty floor or working surface. Not only does a dirty oven cause a potential risk to the person living in the property, but fire damage can be extremely costly for the homeowner.

“Landlords shouldn’t be putting the lives of others in their hands, if it was their son or daughter in the property, I’m sure they would want every possible risk in the home to be at a minimum.”

Ovenu provides domestic oven valeting services to householders, landlords and schools via a UK-wide network of technicians. The Ovenu process involves dismantling key components of an oven such as the door, interior panels, fan and shelves and placing them into design-registered equipment, which uses non-caustic products to thoroughly clean the oven parts.

For more information about Ovenu call 0800 140 9800 or www.ovenu.co.uk

Ovenu is the leading UK and international domestic oven cleaning and valeting specialist. Ovenu is accredited by the British Accreditation Bureau to ISO 9001 and all cleaning chemicals used by Ovenu are environmentally friendly, bio-degradable and conform to the latest government REACH regulations. Ovenu’s Carbon Remover is also approved by the Vitreous Enamel Association.

Alan Ward, chairman, Residential Landlords Association:

“The omission of taper relief from the Budget will work against landlords who have held property for a longer period. The increase in property value will largely be accounted for by inflation. The lower rates of capital gains tax are little compensation for this tax on inflation.”

“Restricting the higher CGT rate to 28 percent for higher rate tax-payers is better than feared, but will cause some complications where property is jointly held by husband and wife landlords.”

“We are pleased the Chancellor has reinstated the allowances for holiday lets and look forward to pursuing the case with his department that this should be extended to all rented residential accommodation.”

“The measures to promote job creation in the regions will have a positive effect on the private residential sector – which is the primary provider of short term housing.”

“The review of housing benefit will require consideration in detail but we welcome the review and hope the opportunity will be taken to restore tenants’ rights to choose direct payment of allowances to landlords.”

The Residential Landlords Association is the leading national organisation whose members own over 100,000 properties in the UK’s private rented sector. The range of members’ services – on www.rla.org.uk – includes advice, insurance, financial services, credit referencing and training.

Privately rented homes are likely to be an even more significant key to future housing needs by the end of this decade, says the Residential Landlords Association.

And how next week’s coalition budget treats the private rented housing sector could make a difference to encouraging its growth or causing one of the worst housing shortages in living memory – says the association’s chairman Alan Ward.

“The wrong approach could have serious social consequences,” he warned.

The RLA’s comments come as a new report suggests that one in five households could be renting their homes privately by the end of the decade. And, by 2013, the private rented sector could overtake the social rented sector.

According to the report, by the charitable housing think tank the Building and Social Housing Foundation, the relative size of the owner occupied sector has declined and the private rented sector has significantly increased – for the first time in a century.

For a variety of reasons, more and more people are becoming private renters and the BSHF is highlighting the urgent need to ensure that this housing sector is able to meet future needs.

The Residential Landlords Association is concerned too.

“The private rented sector is crucial to the UK housing mix,” says Alan Ward. “According to an English Housing Survey private tenants are in general more satisfied with their homes than those in social housing and the private rented sector is essential to provide short term accommodation for young people who have to move to further their careers.

“At a time when government funding is strapped, it is private investment that will enable essential housing needs to be met for the 270,000 new households being formed every year between now and 2016.

“Rather than being seen as a last resort private tenancies are becoming the choice of many people who need the freedom to choose homes where they need and for as long as they need.

“And it is worth remembering, too, that private landlords also provide homes for those rejected by social housing for anti-social behaviour.

“Depending on changes in the forthcoming budget on June 22 the government can encourage the capacity of the private rented sector or cause a housing shortage – with all its social consequences.”

• The Residential Landlords Association is the leading national organisation whose members own over 100,000 properties in the UK’s private rented sector. The range of members’ services – on www.rla.org.uk – includes advice, insurance, financial services, credit referencing and training.