Government’s Own Watchdog Warns Ministers Over Housing Mayhem
There will be a huge shortage of affordable Private Rented Sector (PRS) property for tenants claiming housing benefit if the Government Welfare reforms go ahead in the spring of 2013 as currently planned.
The warning has come from the Government’s own spending watchdog, the National Audit Office and has been backed by the British Property Federation (BPF), which says ministers should take action to stop UK Private Rented Sector (PRS) housing becoming unaffordable to tenants claiming benefits.
The National Audit Office says the danger comes from Local Housing Allowance (LHA), which is paid to benefit tenants in private rented accommodation, being calculated in line with the Consumer Price Index (CPI) rather than local market rent inflation.
The National Audit Office says this could lead to a divergence between local area rents and benefits.
The British Property Federation reckons that Government ministers are aligning rents with the price of sausages.
By 2017 the National Audit Office warns that 48% of all UK local authorities could expect to have double the number of benefit applicants, than at present, looking for two-bedroom properties that they will not be able to afford.
Tenants currently claiming benefits may face financial hardship or even eviction when the proposed changes come into force.
From April 2013, the Government is set to change the way LHA increases are calculated, shifting its sums away from the 50th percentile of local market rents to either the Consumer Price Index or the 30th percentile of local market rents, whichever is the lower.
But knowledge among tenants about the proposed housing benefit changes is minimal, warns the report. Surveys of tenants living in private rented sector properties show that 87% know nothing or very little about the changes.
The report, ‘Managing the impact of Housing Benefit reform’, makes a series of recommendations, in particular that the Government should increase awareness of housing benefit and Universal Credit changes, particularly among those living in the private rented sector. The report also underlines that the National Audit Policy only analyses policy impact, but makes no comment on the policy itself.
The British Property Federation said the Government cannot ignore this report. Policy director Ian Fletcher said: “Since the cap was announced, we have expressed concern that the measure will rapidly and relentlessly erode what Local Housing Allowance will be for. This is because market rents have historically risen with earnings, rather than the basket of goods such as sausages and net curtains.”
The full report is here:http://www.nao.org.uk/publications/1213/housing_benefit_reform.aspx
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