Call 020 8088 9012
Quick Call Back

Name

Telephone Number

Email Address

Best time to contact

Call 020 8088 9012
3let Our Charity Partner Reg Charity No. 1095197
Call 020 8088 9012
Quick Call Back

Name

Telephone Number

Email Address

Best time to contact

landlord rent guarantee insurance – Housing benefit reforms: a huge gamble on rent cuts

landlord rent guarantee insurance – Housing benefit reforms: a huge gamble on rent cuts

landlord rent guarantee insurance

The new housing benefit calculation represents one of the most radical acts of welfare reform in decades, says Linton

Chiswick, and risks banishing entire communities to seaside ghettoes.
Confusion reigns

The beginning of the year saw the rolling out of the new housing benefit reforms to existing claimants who were unaffected

back in April of last year. More than two years after the details were announced in the commons and debated by the media –

and despite a nine-month grace period for those affected to make new arrangements – confusion still reigns.

There’s anecdotal evidence that letters sent by councils to affected tenants are being disregarded or simply misunderstood.

And – despite such a long period of debate – there’s little agreement between pressure groups and the government about the

likely effects of one of the most radical welfare reforms in decades.

The new rules will see entire communities kicked to the curb, or banished to seaside ghettoes with little more than wet sand

and melted ice-cream for comfort, pressure groups say. According to the government, exploitative landlords will be the first

to suffer, and the net effect will be to make renting more affordable.
Claimants to feel the pinch

What’s certain is the vast scale of the reforms. The government’s stated objective is to shave, or rather slash, £18 billion

off the welfare bill for the next four years. Half the budget is spent on pensioners, but spending on the elderly is more or

less ring-fenced. Any suggestion that the welfare claimants who are left will – individually – notice pressure rather than

pain is absurd.

Under the new rules, the local housing allowance (a weighting system) will be calculated from the 30th percentile of a

neighbourhood’s spread of rents rather than the median. To discourage the private rental market from responding with

aggressive inflation, the reforms will cap housing benefit at different levels for different sizes of property, from £250 a

week for a one-bedroom flat to £400 for a four-bedroom house.

New research by the Chartered Institute of Housing (for the Guardian newspaper) suggests that more than 800,000 properties

will become ‘unaffordable’ under the new rules, a quarter of a million properties in London and the south east. Where will

people live? In hopeless, crime-ridden housing benefit ghettos along the seedy Kent coast, they say.
Threat of homelessness looms

Shelter’s take is similar. Historically critical of even the old system, Shelter points out that more than 80% of claimants

already found it ‘fairly’ or ‘very’ difficult to find accommodation. Is there a danger of homelessness? The Cambridge Centre

for Housing and Planning Research expects 250,000 households to find themselves in arrears as a result, with as many as half

of those evicted. Shelter claims that three in every five councilors expect significant new costs as a result.

When Westminster council’s Philippa Roe launched a defence of the new policy in the Telegraph (remember, Westminster’s one of

the super-expensive neighbourhoods targeted by the reforms), she didn’t deny there’d be migration.

‘Whilst we do not doubt some households may need to move,’ she admitted, ‘they may not have to move very far. Even if larger

families do need to move further afield, Westminster has excellent transport links which will allow those who move an easy

trip back to visit friends or to go to work.’

The idea that larger families will be able to live anywhere close enough to Westminster – as rents currently stand – for £400

a week to make it economically viable to commute in to do a low-paid job is fantasy. Which points to the crux of the

argument.
Landlords milk the system

The government and Roe are obviously correct in the assertion that the previous system was unfair, unaffordable and a

cash-cow delivering to unscrupulous landlords. The old upper limit of £2,000 a week gifted the kind of property spending

power associated with a £300,000 a year salary.

Even after the cuts, the new annual housing benefit limit of £20,800 translates to combined household income of £60,000,

where the average wage is a whisker over £25,000. But good reforms deal with the practicalities of where we are now, rather

than simply reacting to a sense of injustice.

At the core, we’re seeing a gamble that – despite recent history – landlords will respond to the reforms by lowering their

rents. Certainly, it’s possible that this is exactly what they’ll do. Alternatively, it may turn out that, encouraged and

strengthened in their resolve by a eurocrisis-influenced credit drought, landlords decide to take advantage of frustrated

buyers (either first-time buyers or families forced to relocate but unable to buy/sell and so temporarily turning to the

lettings market) and push the whole rental market up by going in above that (fluid) 30th percentile.

We’ll all find out soon enough. But housing benefit claimants will find out a little bit sooner than the rest of us.

SOurce: http://citywire.co.uk/money/housing-benefit-reforms-a-huge-gamble-on-rent-cuts/a556946

landlord rent guarantee insurance is a great way to take advantage of the strong letting market without having to handle the headaches. Contact Guaranteed Rental today on 020 8694 8098 to find out more.

Customer Testimonials for our Guaranteed Rental Scheme