Despite the exorbitant claims about lower LHA rents and the acceptance of them by private rented sector, (PRS), landlords made by the coalition government Prime Minister David Cameron in Parliament on January 11th. Only a handful of landlords with tenants on Local Housing Allowance are actually accepting lower rents in exchange for getting rent paid to them directly.
The claim by the Prime Minister David Cameron that private rents are falling as a result of welfare reforms was wrong!
Mr Cameron had claimed in Parliament on January 11th 2012 that: “rent levels have come down, so we have stopped ripping off the taxpayer”. Apparently he was quoting rental data from LSL Property Services, which had only been quoting falling private sector rents.
The data published by LSL Property Services does not take into account LHA rents.
In an attempt to get landlords to lower rents, councils have temporary powers to pay landlords, rather than tenants, the LHA in exchange for lowered rents.
A later statement from 10 Downing St said: “Private landlords were reducing rents – lessening the impact of benefit cuts – in return for local housing allowance being paid directly to them.
The prime minister made his wildly inaccurate claim in the middle of the Welfare Reform Bill’s rough ride through the House of Lords at a time when his government was desperately seeking to convince peers that the package of reforms would not increase homelessness as tenants would be left struggling to meet their rents under the new benefit caps.
Mr Cameron’s claims that private rents are falling as a result of the governments welfare reforms were difficult to swallow for a number of property professionals, prompting one magazine to take action.
The same data was quoted again on 30th January 2012 by Housing minister Grant Shapps, who seized on the same survey by estate agency LSL Property Services, citing it as the evidence Mr Cameron had used to support his claims.
The survey did indeed show rents fell by 0.8% in December – the second successive monthly fall.
However, if the data is examined correctly, the figures reveal the seasonal drop in private sector rents before Christmas was actually less than the 2.3% drop in December 2010 and rents overall had actually risen 4% year-on-year.
The magazine Inside Housing, used the Freedom of Information Act to request information on LHA rents from the Department of Work and Pensions (DWP), and every local authority in England following Mr Cameron’s claim in the House of Commons.
204 local authorities responded, with only 36 reporting any rent reductions in return for direct payment of LHA. Of the 36, 12 reported a combined total of 65 landlords cutting rents, an average of fewer than six landlords in each area.
The DWP says it has ‘no data records’ of how many landlords have reduced rents, but it has collected ‘anecdotal evidence’ from around 80 councils.
It states: ‘The majority have reported that they have used the new safeguard to help claimants negotiate down rents and all plan to use it during 2012 as transitional (payment) protection runs out.
The Inside Housing survey suggests that most PRS landlords are not even remotely tempted to accept lower rental payments for their properties, either directly from local authorities or not.
The National Landlords Association (NLA) and the Residential Landlords Association (RLA) have each disputed the claim rents are falling and believe landlords are more likely to reduce the number of tenancies let to benefit recipients, warning that landlords would rather re-let their properties at the full market price to working tenants, and are able to do so in the current climate of high rental demand.
Labour’s shadow housing minister, Jack Dromey, has already written to number 10 about the issue but received no response and will raise the matter in parliament demanding that Mr Cameron corrects his statement or justifies it.
Mr Dromey said: “Now we know the truth. The nationwide Inside Housing story exposes the reality of rising rents in most areas of the country and explodes the myth that rents are falling”.
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