Reports that the government does not intend to move towards paying housing benefit directly to social housing tenants will be welcomed by lenders.
Council of Mortgage Lenders Press Release – 1 Dec 08
According to a recent report in the Financial Times, the minister responsible for housing benefit, Kitty Ussher, gave a firm re-assurance that housing associations (HAs) and other registered social landlords would continue to have a guaranteed stream of income in the form of benefit paid directly to them.
Following a meeting with the minister earlier this autumn, we wrote to her expressing “very serious concern” about any measures that could disrupt the income stream and therefore jeopardise the contribution lenders make towards funding social housing.
Housing benefit typically provides 60% to 70% of the income of HAs and most of this is received directly by landlords. This guarantees a strong and reliable cash flow, and is cost-effective for landlords. That income is ultimately a source from which HAs repay the funds they have borrowed to build and improve affordable housing.
However, the possibility of paying housing benefit not to landlords but to tenants – who would then use it pay rent to their landlord – emerged as part of a package of measures intended to improve financial capability among tenants and their overall ability to manage money
The reality is, however, that any decision to pay housing benefit directly to tenants would expose the funding of the social housing sector to greater risk. That would have serious implications for HAs, lenders and other investors. Full Article