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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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UK Prime Minister David Cameron has a new vision of the welfare state. He wants state benefits to be a safety net – and nothing more!,

The Prime Minister outlined future radical changes which on top of existing plans, could save the UK an extra £10 Billion (GBP) by 2016.

Government ministers expect this “next wave” of benefit cuts to include the axing of all housing benefit currently paid to around 380,000 people aged under 25.

Such a move would force many young adults to move back in with their parents rather than living independently.

Another controversial reform which could come in further down the line is setting benefit payments regionally – which would mean less money going to claimants who live in less-expensive parts of the country.

Some Tory MPs say the current system is unfair – with differing “incentives” on people to seek work depending on where they live. Liberal Democrats, however, would be likely to oppose any such changes.

The Prime Minister said his overall aim in reforming welfare was to stop people “languishing on the dole and dependency”.

Here are some of the welfare reforms Mr Cameron is considering

• Stopping most under-25s claiming housing benefit. Cameron said the government was spending almost £2bn a year on housing benefit for this group, and that 210,000 people aged 16 to 24 were social housing tenants. Many of them could live with their parents, he suggested.

• Scrapping the non-dependent deduction. Cameron said people could lose up to £74 a week in housing benefit if they have an adult child living with them. That “doesn’t seem right”, he said.

• Cutting benefits for the under-21s. Cameron said that in Holland the benefit system does not normally help the under-21s. When it does, benefits are set at a low level, and parents are expected to top them up.

• Ending subsidised social housing for the wealthy. Cameron said that between 12,000 and 34,000 families on more than £60,000 a year, and between 1,000 and 6,000 families on more than £100,000 a year, were living in council homes. “When you have people on £70,000 a year living for £90 or so a week in London’s most expensive postcodes you have to ask whether this is the best use of public resources,” he said.

• Uprating benefits in line with wage inflation instead of price inflation when price inflation is much higher. Cameron said in September benefits went up by 5.2% (inflation) even though workers were getting much lower pay rises. “Given that so many working people are struggling to make ends meet we have to ask whether this is the right approach,” Cameron said.

• Cutting benefits for the long-term unemployed. Cameron said that when the Americans decided to time-limit benefits in the 1990s, case-loads fell by more than 50%. “Instead of US-style time-limits – which remove entitlements altogether – we could perhaps revise the levels of benefits people receive if they are out of work for literally years on end,” he said.

• Cutting housing benefit further.
The government has already introduced a benefit cap to stop a relatively small number of families claiming exorbitant sums in housing benefit. But Cameron said this would still allow people to receive up to £20,000 a year in housing benefit. “Surely we should ask if it’s fair that the maximum amount that you can get on housing benefit is set at a level that only the top five per cent of earners would otherwise be able to afford,” he said.

• Stopping people from claiming child-related benefits if they have more than a certain number of children. Cameron did not say how many children, but he quoted the number of people on income support with three or more children (150,000) and four or more children (57,000), implying benefits could be capped at two children.

• Requiring people on out-of-work benefits to gain basic literacy and numeracy skills.

• Requiring people on out-of-work benefits to prepare a CV.

• Requiring able people on out-of-work benefits to do full-time community work after a certain period. In Australia this was standard after just six months, Cameron said.

• Requiring people on sickness benefits to improve their health. “Today if someone is signed off work with a bad back there’s no requirement to take steps to get well to keep on receiving that benefit – even if they could be getting free physiotherapy to get back to health and start working again,” Cameron said.

• Requiring more single parents to work – or at least to prepare for work. Cameron said the government was already forcing single parents to look for work when their youngest child reaches five, not seven as before. But, with free nursery care available from the age of three, there was a case for changing the rules again, he said. “Even if there’s no scope for actually working, there should at least be for preparing to work: getting down to the job centre; writing a CV; learning new skills.”

• Imposing tougher restrictions on people claiming benefits if they have never worked than if they have paid tax and national insurance for years before submitting a claim.

• Stopping teenagers from claiming benefits as soon as they leave school. Cameron said he wanted to ask “if it’s right that people continue to have the option of leaving school and going straight onto benefits, without ever having contributed to the system in any way.”

• Stopping paying winter fuel payments and other non-contributory benefits to people who live abroad.

• Stopping paying some benefits in cash and paying them instead in benefits in kind, like free school meals.

Eviction numbers increase as tenants struggle with finances

Evictions for Rent Arrears Increase by 10.2% This Year

County court closures are being blamed for prolonging tenant rent arrears eviction hearings

The number of tenants in severe financial difficulty has climbed by 10.2% in the first quarter of this year according to the latest tenant arrears tracker by Templeton LPA, part of the LSL Property Services plc Group.

Almost 8,800 more tenants were over 8 weeks in arrears and facing the threat of eviction than there were in the last quarter of 2011.

In the first quarter of 2012, an average of 94,400 tenants in England and Wales were in severe arrears, an increase of 20% compared to the same period in 2011.

The figures were affirmed by specialist landlord service provider, Legal 4 Landlords, who handle an average of 20 tenant evictions per day across the UK.

Legal 4 Landlords spokesman Sim Sekhon said: “At the current rate of growth, the number of PRS tenants facing arrears greater than 8 weeks will climb above 100,000 in the next quarter. Tenants have been facing increasing financial pressures due to the state of the economy and the rising cost of living and unfortunately landlords without rent guarantee insurance have been suffering the most”.

Although severe rent arrears cases have continued to increase, PRS tenancies in severe arrears only represented 2.4% of all properties in the private rental sector (PRS) in England and Wales in the first quarter of 2012.

Overall tenant arrears have improved, with 9.3% of all rent either late or unpaid by February 28th, a decrease from 10.7% at the end of 2011.

Paul Jardine, director and receiver at Templeton LPA, said: “While the general tenant population has absorbed the rising cost of renting in the last two years, a minority of tenants are facing severe financial difficulties, a minority that is growing. These tenants have been pushed into deeper and deeper arrears by a combination of rising living costs, high rents and a weak labour market, and are now months behind with the rent cheque. In turn, these severe rental arrears figures have been inflated by the ongoing impact of county court closures. The closures have prolonged arrears cases, with landlords less able to gain court dates to quickly remove non-paying tenants. This is creating a backlog of tenants in extreme arrears, increasing the amount of rental income lost for landlords or their appointed receivers of rent. Despite the recent surge in severe arrears cases, overall tenant arrears have performed remarkably well given the challenging economic environment. In fact, as we often see at this point in the year, more financially robust households are now paying down post-Christmas debt and putting their finances in order, which is helping to reduce the overall level of tenant arrears.”

The annual growth in tenant arrears has been matched by a yearly rise in the number of tenants being evicted by court orders.
In the last quarter of 2011 some 24,702 tenants faced eviction notices, an increase of 9% on the 22,634 in the last quarter of 2010, although the figures reported are 4% lower than they were in the third quarter of 2011.

Rent arrears fall again in 2012

More UK Landlords Using Rent Guarantee Products

Private Rented Sector (PRS) rent arrears dropped in February with 9.3% of all rent late or unpaid at the end of the month, down from 10.7% in January.

With household bills increasing, UK unemployment still rising and the whole country still struggling to avoid a double dip recession as a result of the Eurozone crisis, together with the government’s welfare reforms and public sector belt tightening, there hasn’t been a great deal of optimism around, especially from landlords.

However, figures released by LSL property services show that UK landlords have a little less to worry about, with the amount of rent arrears and late payments falling again.

Either private sector landlords are having an excellent run of good fortune, having tenants who are able, paying the rent in full and on time, or they have become smarter and are now utilising the range of Rent Guarantee products that are currently on the market, to ensure they get paid and their monthly cashflow doesn’t suffer.

Being a landlord and letting a property in the UK means there will always the risk of the tenant not paying the rent, (rent default).

Even the best tenant referencing service cannot predict if a tenant will lose their job and fall on hard times and not be able to pay their rent.

How do landlords cover their expenditure if this happens?

In today’s struggling economic climate, many UK landlords are finding their tenants struggling with rising unemployment and increased bills. Often leading to the rent not being paid and the tenant facing eviction when the amount of rent arrears exceeds 8 weeks.

Recovering arrears can be difficult and costly for landlords, without any guarantee of success.

At Legal 4 Landlords, our Rent Guarantee Insurance will cover landlords against their tenant defaulting or failing to pay the rent.

Mortgage approvals, residential property sales and first time buyer numbers increase

Is the UK property market making a comeback?

January figures from a variety of trusted and respected sources offer a major boost for the UK property market as mortgage approvals, first time buyer numbers and residential property sales all increased during January.

Data gathered from the Council of Mortgage Lenders (CML), British Bankers’ Association (BBA), National Association of Estate Agents (NAEA) and HM Revenue and Customs (HMRC) is viewed as a major boost to the UK property market.

UK property buyers have been taking advantage of the two-year stamp duty exemption due to end in March 2012, with the number of First-Time Buyers (FTB’s) registering with estate agents also being the highest since May 2011.

The British Bankers’ Association (BBA) say that, 38,092 applications were approved in January, 34% up on the same time last year, and the highest figure seen in two years.

The National Association of Estate Agents (NAEA) figures show that 23% of overall property sales in January were made to First-Time Buyers, a rise from 21% in December, marking the third consecutive monthly increase.

Mortgage lenders have claimed that one of the driving forces behind the increase in activity has been the imminent end of the two-year stamp duty holiday for first-time buyers.

The Council of Mortgage Lenders (CML) reported that the £10.5 Billion (GBP) loaned in the form of mortgages during January 2012 was the sixth month in a row that the year-on-year figure has risen, and overall mortgage lending in January was up 10% on a year ago.

Despite general consumer caution around borrowing, first-time buyers have flocked to get on the property ladder, showing stamp duty was a major deterrant.

NAEA President, Wendy Evans-Scott, said: “The figures suggest that stamp duty is a key factor for those on tight budgets who are considering a property investment”.

Overall residential sales across the UK property market increased from 5% per branch in December to 6% in January.

The number of residential properties sold in the UK was 12,000 up on January 2011 and also at its highest level for four years.

HM Revenue and Customs (HMRC) figures showed that a total of 64,000 property transactions went through during January, up on the 52,000 deals in January 2011 and the best start to a year since 2008’s tally of 79,000.

David Dooks, BBA statistics director, said: “January saw the high street banks approve more mortgages for house purchase than of late, despite low household confidence, as some people try to complete transactions before the stamp duty holiday ends in March.”

All in all, this is great news for the UK property market and a warning sign to property investors that they are no longer the only people buying property.

Legal Update by Legal 4 LandlordsFollowing a recent High Court decision the new defence to a Section 21 Notice is none compliance with The Housing (Tenancy Deposits) (Prescribed Information) Order 2007

The decision in Suurpere-v-Nice (2011) confirms that the prescribed information must be complied with and if this is not done landlords could be subject to sanction when before the Courts

The Sanctions

  • If a possession claim subject to section 21 of the Housing Act 1988 is issued without the information being properly provided and served, the section 21 notice will be invalid and the claim could be struck out.
  • A counter claim can be made, and if the prescribed information has not been provided or if the deposit was not registered, the Court may award 3 times the deposit.
  • Ultimately the deposit protection is the responsibility of the landlord and as managing agents you have a duty to comply with the regulation on behalf of the landlord.

What is “Prescribed Information”?

• The minimum information required by statute that is to be given to the tenant on registration of the deposit. This must be as a separate certificate and signed by the landlord and tenant and not part of the tenancy agreement.

• This must be a certificate and it must be sent to the tenant with the proof that the deposit has been registered together with any information provided by the individual deposit scheme.

Download our Fact Sheet on Deposit Law Issues and Latest Case Law Updates and Clarifications

Tenants caught attempting green fingered financial return

Green Fingered Tenants Void Landlord Insurance as Buy to let targeted by drug gangs

Landlords looking to squeeze every last penny of profit from rental properties may have made the wrong decision when it comes to choosing the right insurance for their rental properties.

Only to find that when they need to make a claim they are either not covered for it or worse still their insurance is actually null and void.

Cheapskate landlords may have taken what they thought was the easy and cash saving option and instead of choosing a specialist Buy-To-Let or Landlord insurance policy, they fulfilled their legal obligation to their mortgage lenders by taking out a cheaper standard Homeowner’s “Buildings Only” insurance policy.

Every day in the UK another unfortunate landlord becomes the victim of crime. From anti social tenants to drug producers, who do not respect the law, the landlord’s rental property, or anything else, including the consequences of their actions, often causing many thousands of pounds worth of damage to the landlords property in the process.

Damage that may not be covered by some insurance policies.

Due to the economic squeeze on many UK household’s finances, the opportunity to make a quick buck has become an increasingly attractive proposition for some members of society, even if that means breaking the law.

Recent reports suggest that an increasing number of tenants in Private Rental Sector (PRS) properties are attempting growing cannabis or marijuana as their way to try and cash in.

The emergence of Buy To Let cannabis farming was first reported in 2003, when increasing numbers of buy-to-let properties up and down the country began to be targeted by gangs of cannabis farmers looking to house their criminal activities.

The gangs would present bogus identity credentials and references and have the cash to cover the rent, the landlord would be fooled into thinking that they had found perfect tenants, only to get a call or knock on the door from the police a few weeks later.

Tenant referencing has become a lot more sophisticated in recent years and all prospective tenants should be comprehensively referenced and credit checked by a reputable provider, such as Legal 4 Landlords, who will do all the work for you.

However, there will be a small minority of people who will pass the in depth referencing process and still go on to carry out illegal practices in a rental property.

Private Rental Sector residential properties in respectable suburban neighbourhoods have become the preferred base for cannabis cultivation for some drug gangs as they think they will attract less police attention in more middle class areas.

If the landlord suspects anything illegal or anti social is going on at their rental property and need tenants to be evicted, contact Legal 4 Landlords at the earliest opportunity and they will handle the eviction process on the landlords behalf

Often when cannabis farms are discovered the damage to landlords and their rental properties, in both financial and legal terms, can be catastrophic. Uninsured landlords may find themselves having to foot the bill for extensive repairs to their properties

Landlords should ensure that their specialist Buy To Let or Landlord insurance policy covers them for all the possible eventualities, including malicious damage by tenants.

If landlords discover that a tenant is carrying out cannabis farming or any other form of anti social behaviour or illegal activity in their properties they should call the police immediately and should not directly confront the tenants.

Legal 4 Landlords can handle the eviction of anti social tenants for UK landlords.

Property investors need to research before they buy in 2012

UK BTL property investors urged to be thorough with Due Diligence

Property investors are being urged to thorough research in order to be very selective about the areas they choose to purchase investment property in during 2012.

Poor returns from savings and the continuing strong demand for rental property will be the driving factors behind an increase in property investment in the UK buy to let (BTL) market.

However, taking a gamble on certain locations could be risky for would-be Buy To Let landlords with unemployment rising, Government welfare reforms and the fallout from the Eurozone crisis still looming.

UK property investors are urged to seek to purchase Buy-To-Let properties in popular residential areas with a good infrastructure and a strong employment market, such as upmarket commuter hotspots around all major cities.

Buyer and tenant demand will continue to outstrip the current supply of UK housing stock, supporting property price growth.
Property investors should avoid areas that are reliant on manufacturing or the public sector, during 2012 as these areas may face high levels of unemployment, and with the cap in housing benefit payments now in effect, rental yields may not be as healthy. Such areas are expected to see relatively low property transaction levels in 2012 and a fall in house values that could be more than 5%.

By conducting thorough Due Diligence property investors can purchase Buy-To-Let properties in strong locations that will deliver a reliable rental incomes and a good supply of quality tenants, in addition to a modest capital growth

A list of useful Due Diligence sites to aid property investors in their search for the best areas can be found here

Private Rental Sector property rents are expected to continue growing strongly in most areas, hopefully, in the region of +5% this year, due to continued restricted mortgage lending and poor employment prospects leaving a whole generation of potential first time buyers (FTB’s) with little prospect of buying a home.

To ensure rental income remains constant throughout the duration of a tenancy, landlords can utilise Rent Guarantee insurance to keep a regular income coming in from their buy-to-let property.

Policies offered by Legal 4 Landlords include 6 and 12 Month Rent Guarantee insurance policies designed to protect landlords whose tenants default on rent payments.
Rent Guarantee insurance can also provide additional cover to meet the cost of legal proceedings for the eviction of defaulting tenants from rented properties.

Government Welfare Reforms Stumble

Government Welfare Reforms Stumble

The UK Coalition Government plans to cap benefits will still be fully implemented despite the parliamentary defeat in the House of Lords on Monday this week.
A defeat that saw 26 Lib-Dem peers rebel against the Government’s wishes.

Although, the Government have admitted that whilst disappointed by the result, they still intend to push through the plans for welfare reform in full.

The plans have caused deep unease in the Lords and prompted a number of Church of England bishops to launch a bid for the reforms to be curbed, backed by a majority of 15.

Bishop of Ripon and Leeds, the Right Reverend John Packer introduced the amendment and following its success, said: “It cannot be right for the cap to be the same for a childless couple as for a couple with children. Child benefit is the most appropriate way to right this unfairness.”

Work and Pensions Secretary Iain Duncan Smith led the Government’s call for all benefit payments limited to a maximum £26,000 a year per household, claiming that it will save approximately £600 Million (GBP) towards the UK’s multi Billion pound economic deficit.

Lord Paddy Ashdown joined 25 other Lib Dem peers voting for child benefit to be excluded from the cap calculations. The former party leader, previously a loyal supporter of the Government, said that as president of the United Nations children’s agency UNICEF, he was not prepared to back the Government’s plans in their current form, denouncing them as “completely unacceptable”.

Deputy Prime Minister Nick Clegg has stated that he fully supports the Governments changes to the welfare benefit system, despite the rebellious divisions from within the Lib-Dem ranks.

A Department for Work and Pensions (DWP) spokesman said: “There has to be a limit on the amount of money benefit claimants can receive. We think that limit is set at a fair rate of £26k – the equivalent to someone earning £35,000 before tax, a salary that many working families would be happy to receive.”

Around 67,000 families will lose £83 a week under the cap, which is due to be brought in from 2013 in England, Scotland and Wales.

It is expected that the welfare reforms will result in many families currently claiming housing benefit facing mounting financial pressures and even eviction from their homes, if they are unable to pay the rent.

If UK landlords do find themselves in the unenviable position of chasing bad debts or rent recovery, or if the worst happens, having to evict defaulting tenants then they should use the services of a reputable eviction specialist such as Legal 4 Landlords, to save effort, money, time and stress.

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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

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