Private landlords, having taken up the mantle of providing a big proportion of the UK’s social housing, now house record numbers of low-income tenants. The consequence of this is that housing benefit payments to private landlords have double in 10 years to £9.3bn.
As tenants on no, or low, incomes have shifted into the private rented sector (PRS), with the demise of social housing, private landlords’ share of housing welfare payments has doubled in the last 10 years to £9.3bn pa.
Whilst there are calls to reverse the trend and increase construction of more social housing, cash-strapped councils have so far failed to respond, hand the Housing Associations have been the victims of punitive government regulations, resulting in almost one-in-three housing benefit claimants, totalling around 1.5m households, now living in a privately rented home. This figure has increased from one-in-four since 2008.
According to the FT, the total housing benefits bill now exceeds £24bn per year, while before 2006 the total bill had never exceeded £18bn.
The National Housing Federation (NHF), which promotes the work of housing associations and campaigns for better housing, argues that if all tenants receiving housing benefit were in social homes, the government would save £2.2bn a year.
David Orr, chief executive of the NHF says:
“It is madness to spend £9bn of taxpayers’ money lining the pockets of private landlords, rather than investing in affordable homes.”
“Housing associations want to build the homes the nation needs. By loosening restrictions on existing funding, the government can free up housing associations to build more affordable housing at better value to the taxpayer and directly address the housing crisis.”
The NHF quote figures derived from Department for Work and Pensions (DWP) data, which show the average weekly housing benefit award is £89 in the socially rented sector, but £110 for private rents, with London recording rents 51 per cent higher at £188.
However, does this argument stack up? Does it really cost more to house low-income tenants in private rented housing? Perhaps a thorough economic assessment is needed here?
The Chartered Institute of Housing last year produced figures that show housing benefit has failed to keep pace with increases in private rents in many areas, and DWP claim that the proportion of housing benefit spent on private rents has declined since 2012, from 40 per cent to 37 per cent.
“The reality is we have taken action to bring the housing benefit bill under control,” he said. “We are also committed to building the homes this country needs and investing £8bn to build 400,000 more affordable homes.”, said a government spokesperson.
Richard Lambert, chief executive of the National Landlords Association, told the FT:
“Housing benefit is not a subsidy to landlords; it’s a support for tenants to ensure they can pay for their housing. London needs a new housing master plan
“What we should all be talking about is the failure of successive governments to adequately allocate its housing budget and to incentivise the building of new homes.”
Following punitive legislative changes under Chancellor George Osborne, the social housing sector (Housing Associations), according to the FT, is seeking to regain the initiative under the new prime minister, Theresa May, following the government’s pledge to increase housing construction.
Meanwhile, private landlords are still reeling from the tax changes introduced by previous Chancellor George Osborne, which means they are faced with a much more challenging business environment. A policy which was intended to create a “level the playing field” for the first time buyer, some argue, will simply increase rents for private tenants.
Record numbers of low-income private tenants https://t.co/2F887GqcOa
— LandlordZONE (@LandlordZONE) August 25, 2016