September 17, 2010
Widespread cuts to public benefits could have a far-reaching effect on the nation’s lettings market as landlords fear slashes to housing allowances could increase homelessness and reduce rental income.
The government plans to cap the local housing allowance (LHA) at 30% of average local rents, with future increases linked to the Consumer Price Index, rather than the Retail Price Index which tends to be higher.
As a result, nine out of ten landlords would be less likely to rent properties to tenants receiving housing benefits in the wake of stringent government cuts, according to surveys by the National Landlords Association (NLA).
Nearly half of those questioned also said they could not afford to reduce the rents they charged in line with the cuts in order to keep existing LHA tenants.
A further two-thirds said they were unsure what impact the reforms to the LHA would have on their business.
"While we understand cuts need to be made to bring the burgeoning LHA budget under control, the extent of the planned cuts could lead to serious reductions in the supply of affordable accommodation,” commented David Salusbury, Chairman of the NLA.
"Landlords are already struggling to deal with rental arrears and this will only worsen if benefits paid to tenants are reduced.
"We call on the government to re-assess the impact of the planned changes on the private-rented sector."
Ideas proposed by the NLA to reduce the impact of cuts include paying housing benefit directly to landlords, guaranteeing that rent remains constant and tenants do not face the fear of eviction.
"This change would at least give the landlord more certainty that rent will be paid and go some way towards cushioning the impact of the forthcoming cuts," added Mr Salusbury.
The extent of housing benefit cuts will be outlined by the Chancellor of the Exchequer George Osborne in October.
