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New Report Backs Welfare Reforms

New Report Backs Welfare Reforms

Research from an independent consortium led by the Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University covering the impact of recent Housing Benefit reform in the private rented sector was published on Monday 13th May.

The report examined the attitudes of tenant claimants and private rented sector buy-to-let landlords in 19 areas across the UK, following the Housing Benefit and Welfare Reforms that were ordered by the coalition Government in April 2011.

Lord Freud, minister for welfare reform said:”Reform of Housing Benefit in the private rented sector was absolutely necessary to control a system that saw spending double over a decade to more than £20 Billion (GBP) a year. However, it is also necessary to monitor and follow the reforms to help us build and learn for the future”.

Ian Cole, Professor of Housing Studies at the Centre for Regional Economic and Social Research (CRESR), said:”This report provides findings from in-depth interviews undertaken with tenant claimants, landlords and housing advisors in early stages of the implementation of the reforms.

The CRESR also conducted separate analysis of all UK Housing Benefit claims to provide an insight to the initial impacts of the welfare reforms across the UK.

The CRESR report finds:

  • Large numbers of tenants claiming benefits have not been forced to move out of rental properties during the study
  • In 120 UK local authority areas, overall reductions to a tenant’s Housing Benefit / Local Housing Allowance (LHA) have been averaged at £5 (GBP) or less
  • The extra £130 Million (GBP) of support from the Department of Work and Pensions (DWP) to local authorities to help tenant claimants with Discretionary Housing Payment (DHP) has assisted tenant claimants well where Housing Benefit / LHA reductions have been greater than the national average.

The consortium is led by Ian Cole, Professor of Housing Studies, from the Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University. Other key team members included Peter Kemp of Oxford Institute of Social Policy, Carl Emmerson of the Institute for Fiscal Studies (IFS) and Ben Marshall from IPSOS-MORI.

The Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University is one of the UK’s leading academic research centres specialising in social and economic regeneration, housing and labour market analysis.

The consortium’s research started in April 2011 and will run until this Autumn (2013) and covers the effects of:

  • Setting Local Housing Allowance (LHA) rates from the median to the 30th percentile of local market rents from April 2011
  • Capping Local Housing Allowance rates by property size from April 2011 to:
    • £250 per week for 1 bed
    • £290 per week for two bed
    • £340 per week for three bed
    • £400 per week for four bed or more
  • The increased Government contribution to the Discretionary Housing Payment (DHP) budget
  • Increased powers of local authorities to make direct payments to landlords to support tenant claimants in order to retain and secure tenancies in the private rental sector.
  • Allowing an additional bedroom within the size criteria used to assess Housing Benefit claims in the Private Rented Sector where a disabled person, or someone with a long-term health condition, has a proven need for overnight care and it is provided by a non-resident carer who requires a bedroom.

The full research ‘Monitoring the impact of changes to the Local Housing Allowance system of Housing Benefit: Interim report’ is available here: Monitoring the impact of changes to the Local Housing Allowance system of Housing Benefit: Interim report

The Scottish Government along with the Department of Communities and Local Government (CLG) and Welsh Assembly Government are working in close partnership with the DWP and each contributing to the costs of the review.

Further CRESR reports are expected to be published in early 2014.

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.

Welfare reform could lead to more Tenant Evictions

Welfare reform could lead to more Tenant Evictions

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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