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In an interview with the Mail on Sunday, Prime Minister David Cameron suggested cutting housing benefit for people under the age of 25 in an attempt to claw back Millions of pounds worth of Government money

Housing benefit is paid to adults on a low income, to help them pay their rent, either to the local council, a private landlord or to a hostel.

It is currently paid to around 380,000 under-25s and scrapping their entitlement would save the government around £2 Billion (GBP) a year.

The Prime Minister suggested that the current housing benefit system is sending out “strange signals” that people are “better off not working, or working less”. It encourages people not to work and have children, but we should help people to work and have children”.

The proposed reforms to the welfare system could be presented as an effort to reduce a feeling of antipathy towards people on benefits that may exist among the general public.

Mr Cameron said that current benefits system has “led to huge resentment amongst those who pay into the system, because they feel that what they are having to work hard for, others are getting without having to put in the effort.”

He also commented that cutting housing benefit for younger people would “stop the state dragging young people into dependency”.

Downing Street said that Mr Cameron wanted to encourage a debate about welfare.

The Prime Minister is also considering proposals to set benefits at a regional level, rather than a national level, in order to reflect wide regional variations in pay.

Political analysts have suggested that Mr Cameron’s comments are part of an effort to reconnect with Conservative backbenchers who believe the party’s values are being watered down under the coalition.

Housing charity Shelter has warned that cutting housing benefit for young people could lead to an increase in homelessness.

The charity’s chief executive Campbell Robb said: “To take away housing benefit from hundreds of thousands of young people – particularly in the current economic environment where young people in particular are finding it very difficult to find jobs – would have a devastating impact on many people’s lives. I think we would see many more people ending up homeless as a result of this kind of very significant change.”

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Why Does Housing Benefit Cost Taxpayers £22 Billion (GBP) A Year?

The latest figures from the Department for Work and Pensions, (DWP), show there are close to 5,000 families still claiming more than the £400 Housing Benefit cap.

According to a report in the Daily Mail

  • At least 100 families are living in luxury homes and raking in enough housing benefits to fund a £1 Million mortgage each
  • Of the 100 families, 60 have their rent paid by the state to the value of £5,000 a month, according to the Department for Work and Pensions
  • More than 30 of those families are given a staggering £1,500 a week (£6,000 a month) to live on and at least 60 families receive more than three times the national average wage, getting £5,000 a month
  • Unemployed living in luxury homes in upmarket parts of London such as Kensington, Chelsea and Westminster
  • Poor families should not be allowed to live ‘swanky’ lifestyles in postcodes beyond their means, says campaigners
  • Calls for the Government’s £400 per week cap to be properly enforced

Although almost four out of every five people on housing benefit pick up less than £100 each week.

At a time when millions of people are struggling to get on the housing ladder, the handouts would easily cover the monthly payments on a £1Million (GBP) mortgage.

Government ministers last year announced a sweeping range of welfare reforms that included housing benefit, which costs the taxpayer £22 Billion (GBP) every year, should be capped at £400 per week.

The figures have been criticised by campaigners and raised concerns that the Government’s plan to cap housing benefit is not being enforced.

Public opinion has been riled by the cases of immigrants and asylum seekers who have been allowed to live in lavish flats at the expense of taxpayers.

The Government handouts have allowed families to live in upmarket parts of London such as Kensington, Chelsea and Westminster alongside wealthy neighbours such as Roman Abramovich and George Michael.

WHERE HOUSING BENEFIT CASH GOES EVERY YEAR 

  • NORTH  EAST………………………….. £923.8m
  • NORTH WEST……………………….. £2,371.5m
  • YORKSHIRE…………………………….. £1,497m
  • EAST MIDLANDS………………….. £1,112.6m
  • WEST MIDLANDS…………………. £1,736.6m
  • EAST…………………………………….. £1,632.6m
  • LONDON………………………………. £5,539.0m
  • SOUTH EAST………………………… £2,536.9m
  • SOUTH WEST……………………….. £1,525.9m
  • WALES…………………………………….  £892.9m
  • SCOTLAND ………………………….. £1,660.6m

TOTAL  £21,429.5m

 

The figures will raise calls for the Government’s benefit reforms to be bulldozed through the Commons – despite pleading from Liberal Democrats.

The data, made public under the Freedom of Information Act, show the areas of the UK that pay out the most in housing benefit are

  1. Birmingham – £469 Million per year
  2. Glasgow       £337 Million per year
  3. Brent            £306 Million per year
  4. Westminster £281 Million per year
  5. Hackney       £267 Million per year
  6. Newham       £264 Million per year
  7. Enfield          £258 Million per year
  8. Haringey       £254 Million per year
  9. Liverpool      £254 Million per year
  10. 10.  Manchester £248 Million per year

The DWP says the new rules which have been put in place mean that those families currently getting more than £400-per-week will be gradually taken out of the system and moved into cheaper accommodation.

A DWP spokesman added: ‘These figures underline exactly why our Housing Benefit reforms are so necessary’.

Emma Boon of the TaxPayers’ Alliance said: “This is further evidence that it is right to cap benefits. It is unfair to ask taxpayers to pay for swanky central London homes for others when they can’t afford to live in those postcodes themselves. Many middle or low income families have to decide if they can afford to house their family in town, or if they have to move out to somewhere more affordable. It is not unreasonable to ask those on benefits to make the same choice.”

 Read the Full Daily Mail article here

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UK Government to argue the case for Welfare Reform in the House of Lords

Government to argue the case for Welfare Reform in the House of Lords

The coalition Government face another battle over welfare reforms, this time in the House of Lords.
The outcome will affect individuals and families in receipt of local housing allowance (LHA) or housing benefit, who are in private rented sector (PRS) properties.

The Welfare Reform Bill, currently going through the House of Lords, is set to cap total benefits for working age households at £26,000 a year.

The total payment would include the present Local Housing Allowance, paid to housing benefit tenants in private rented sector accommodation.

However, a number of peers fear this would disproportionately hit larger families with children in temporary and private rented sector housing.

The Bishop of Ripon and Leeds, the Right Reverend John Richard Packer, has tabled an amendment which would exclude child benefit for the purposes of the benefit cap.

Lord Richard Best who is also supporting the amendment said: “I don’t think it’s conceivable for families with children to be evicted and become destitute because a benefit cap means there’s nowhere they can afford to live.”

The amendment is expected to go before the Lords next week (January 23rd 2012), and is likely to gain support from many areas, including Liberal Democrat peers who have previously rebelled against the Government.

The UK government’s welfare reforms are bad news for both tenants and landlords. Struggling tenants already face mounting debts and real financial problems including the threat of eviction if they are unable to keep up with the rental payments and slip to more than 8 weeks in arrears.

This results in a double blow for landlords, not only do landlords have to suffer loss of income because the tenants have not paid the rent but also the further expense of court action to have the tenants evicted.

Tenant Evictions can be cost effectively handled by Legal 4 Landlords, who are the UK’s fastest growing eviction specialists who also offer a wide range of additional services for landlords including Rent Guarantee Insurance

No DSS for UK landlords

Landlords Don't Want Benefit Tenants

UK landlords have little confidence in the current Housing Benefit system and the majority would try to avoid accepting tenants in receipt of benefits due to the extra hassle and headaches that dealing with local authorities and local government departments cause.

Landlords claim that tenants who do not receive any form of welfare support are far more reliable when it comes to paying the rent on time and generally looking after the property.

The findings of a survey of over 1,000 UK landlords by flat and house share website Spareroom discovered that:

• 86% of Buy-To-Let landlords surveyed were against the welfare reform of the UK benefit system which since 2008 has automatically paid Local Housing Allowance (LHA) directly to the tenant, except under exceptional circumstances.
• 87% of UK landlords who accept tenants in receipt of Housing Benefit have had problems with the rent not being paid on time.
• 59% of landlords questioned state No DSS when advertising property to let

UK landlords were also asked why they would refuse DSS tenants,

• 11% of landlords have had benefit tenants who have stopped paying the rent.
• 30% believe working tenants are more reliable
• 47% did not want payment problems
(including late payments, no payment at all, issues arising from the suspension of benefit payments and/or damage to the property).
• 34% of landlords currently have LHA tenants in one or more properties
• 45% have previously taken in LHA tenants.
• 58% had previously experienced multiple problems with benefit tenants.
• 74% would refuse LHA tenants even if the tenant had a working, homeowner as a guarantor.

Director of Spareroom, Matt Hutchinson, said: “It’s clear from this survey that a shake-up of the current system of paying housing benefit to the tenant is desperately needed, and reverting back to the old structure, where landlords could receive rental payments directly from the council would be a step in the right direction.”

Legal 4 Landlords spokesman Sim Sekhon agreed; “The current LHA benefit system requires an overhaul as it causes many financial problems for landlords. Unless the tenants are in arrears and the local authority has agreed to make direct payments, the landlord has no guarantee of receiving the full rental payment from the tenant every month, unless they have Rent Guarantee Insurance.

59% of Private Rental Sector (PRS) landlords refuse to accept applications from tenants claiming benefits, including me!

Landlords claim that tenants who do not receive any form of welfare support are far more reliable when it comes to paying the rent on time and generally looking after the property.

In a survey of more than 1,000 UK landlords by website SpareRoom.co.uk showed that over half of the landlords surveyed had a  “No DSS” clause on their adverts. I too have the same clause and whilst I do not want to discriminate against people I do feel it is necessary to protect my rental income and my properties.

Landlords taking part in the survey were asked why they would not rent out their property to housing benefit tenants:

  • 30% said non-benefit tenants were more reliable,
  • 47% said they did not want the hassle of dealing with payment problems.

SpareRoom.co.uk called for changes to the way Local Housing Allowance (LHA) was paid, joining calls from the Residential Landlords Association (RLA) and homeless charities “Shelter” and “Crisis” to return to direct payments to landlords, which could increase the number of PRS properties being let to tenants claiming state benefits.

Matt Hutchinson, director of SpareRoom.co.uk, said: “The coalition government’s planned welfare cuts to housing benefits, coupled with the lack of affordable housing in the UK, could have a devastating impact on families and individuals relying on the state for help with living costs. But it seems that landlords, who have had bad experiences with housing benefit tenants, are reluctant to help ease the pressure caused by a rental property shortfall, favouring private tenants instead. The move to change the way Local Housing Allowance was paid in 2008 was designed to give those on housing benefits greater responsibility for their finances, but what this poll shows is that the change has had overwhelmingly negative repercussions for British landlords. It’s clear from this survey that a shake-up of the current system of paying housing benefit to the tenant is desperately needed, and reverting back to the old structure, where landlords receive rental payments directly from the council would be a step in the right direction.’

According to the survey, 87% of landlords have had problems with housing benefit tenants not paying rent on time and 11% claimed to have had tenants who had stopped paying rent altogether. I unfortunately fall into both these percentages having bad experiences with benefit tenants and very little help or advice from my local authority.

In the survey, UK landlords said that problems associated with DSS tenants included late rent payments, damage to the property and problems arising from suspension of benefits.

74% of landlords said they would not take a tenant on housing benefit even with a working Homeowner acting as their guarantor and I must agree with them.

Once bitten and all that, but one thing is for sure from my point of view – NEVER AGAIN!!!

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The clock is ticking

Time is Running Out For LHA Landlords

1st January 2012 will see further changes to Local Housing Allowance (LHA) under the Government’s welfare reform.

 The age limit for shared accommodation room rate is set to rise from 25 to 35.

 This means that anyone under 35 and living by themselves or renting a room will be restricted to the shared room accommodation rate.

 This new figure is obviously well below the current market rent for 1 bedroom properties in most areas, as this will now be calculated on the 30th percentile of the rental cost for 1 bedroom properties in each area.

 This could mean disaster for landlords in the Private Rented Sector (PRS) as tenants in receipt of benefits will soon fall into arrears as their housing portion of their benefit payments (Universal Credit) are reduced by the Government.

 With increasing unemployment due to the state of the UK & World economies, more and more people are finding themselves having to make a claim for state benefits including LHA.

 2012 may well see an increase in evictions, homelessness and maybe even a drop in the average property rental price, as landlords could be forced to lower their rents to accommodate tenants who are only entitled to the lower threshold of housing allowance.

 This scenario has been cited by landlords who keen to avoid benefit tenants and now are only seeking tenants in employment. The private rented sector could end up the exclusive territory of the employed in a few years time and landlords are urged to make thorough reference checks when accepting new tenants.

Landlords who wish to learn more about successful LHA renting and how to deal with local authorities to ensure direct payment, should consider buying “The Essential LHA Manual For Landlords” by The LHA Expert – John Paul.

The ebook costs £47 and is packed full of the exact processes and systems The LHA Expert uses to get paid directly by Local Authorities on 97.9% of the 500+ properties he has let out to LHA Tenants, the contents include:

  • Why you should bother with LHA, and how embracing the opportunity can take you from “Arrears Hell to Cash-flow Heaven”
  • Which properties to target for maximum profit
  • How to make sure you get the full amount of rent available
  • Who to steer clear of to avoid problems
  • Some little known “secrets” to using the LHA rules to your advantage
  • How to switch Tenants on the old system onto LHA to increase your income
  • Exactly how to make a claim – so that you actually get paid!
  • How to virtually GUARANTEE you get paid directly by the Local Authority –(this one alone is worth buying the book for!!!)
  • How you can get paid direct after 4 weeks NOT 8 weeks
  • The latest on Overpayments, and how you can make sure they are taken from the Tenant and NOT you
Landlords want to avoid LHA tenants

UK Landlords Want To Avoid Tenants Claiming Benefits

UK landlords could soon be forced out of the Local Housing Allowance (LHA) market by the Government cap on housing benefit payments.

77% of UK landlords who currently accept tenants claiming benefits are already planning to, or are actively taking steps to reduce their involvement with DSS/LHA tenancies because they are physically unable to afford to continue letting their properties on lower rates of LHA.

A survey by the National Landlords Association (NLA) found that over a quarter of landlords who responded said they were already actively reducing the number of tenants who are currently receiving housing benefit payments, half of all other respondents also said that they were planning to reduce the number of DSS tenants.

UK households currently claiming Local Housing Allowance number nearly 1.3 Million. This could have a devastating effect for many UK landlords as the LHA is now subject to a cap on its upper limits including a maximum 4 bedroom rate.

David Salusbury, Chairman of the National Landlords Association said “The capping of housing benefit payments will lead to more people struggling to pay their rent at a time when a shortage of housing is increasing pressure on the private rented property sector. The NLA urge the Government to monitor the impact of rolling out LHA caps to ensure vulnerable tenants are not placed at risk and landlords can continue to provide this accommodation”.

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