Housing Benefit Reform

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Housing Benefit Reform

Postby juliet » Thu Feb 23, 2012 9:23 pm

Just wondered whether landlords are aware of the housing benefit reforms that are coming soon?

Single room rent allowance (about £50 and might be called something different now) has been extended to people aged under 35 (was previously under 25). That means if you rent to any single person under 35, they will only get £50 a week to pay their rent. Maybe a good opportunity to go into the shared house market. Starts April 12 but some are protected for a year to give them time to find a new home.

Bedroom tax - working age people under occupying will get a deduction for any extra rooms that they have so one to watch out for. Don't let any tenants under occupy unless they are aware of this new rule. I think that it kicks in in April 13.

The switch from housing benefit payments direct to the landlord (with a couple of exceptions) so that the tenant is paid the money. Exceptions are probably going to be 'vulnerable' or where people have 8 weeks worth of arrears. So I think that will mean a lot of unpaid rent for those who haven't managed their 'own' money in the past.

The switching of housing benefit to a 'housing element' payment as part of a monthly, paid in arrears 'universal credit' payment so where tenants are currently paid their benefit weekly/fortnightly - when they switch to universal credit a month in arrears they might not be able to manage for a while and again rent may go unpaid.

The pinning of universal credit to CPI rather than RPI - that will mean if you increase your rents in line with RPI at the moment, your tenant won't be able to keep up so you will have to consider CPI - think that it was about a 0.9% difference this year. I suppose private rents are flexible enough to be able to handle that?

More reasons to rent to people in work really and it feels like renting to benefit clients won't pay?
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Re: Housing Benefit Reform

Postby Geometer » Sat Feb 25, 2012 1:58 pm

As a benefit claimant renting from a private landlord, I feel incredibly lucky that I moved into a flat, 2 years ago, with a rent low enough not to be affected by most of these cuts. It's a different situation for my neighbour, however.

She's a pensioner, and lives on her own. She's not disabled, but she's deaf and epileptic, so she's certainly vulnerable. We share a landlord, but while my flat is ground floor, hers is on the first (we're in a two-storey terrace converted from a garage about 20 years ago), and somewhat larger than mine, and her rent is correspondingly higher.

She was found this flat by the local council, and moved in 6 years ago with the assurance that her rent would be paid in full by the council for as long as she lived there. Last September, however, she was told that her Housing Benefit was going to be reduced by £24 a month (I believe because her rent falls above the thirtieth percentile now used to calculate LHA).

She's done nothing to deserve this. She's a perfectly decent, ordinary, woman who's spent her life bringing up a family and now finds herself alone and dependent upon the State in her declining years. By no stretch of the imagination is she a "workshy benefit scrounger", but through no actions of her own, she's been placed in the invidious position of having to choose between making up the difference in her rent from her, already inadequate, pension; or relying on the goodwill of a disinterested landlord who has a living to make.

Similarly, our landlord is placed in the equally invidious position of having to decide between accepting a loss of income, insisting that she makes up the shortfall out of her pension, or terminating her tenancy and renting to someone in work. Fortunately, he hasn't made an issue of it - these flats are hard to let, and I think he's just glad to have tenants who aren't anti-social - but this new method of calculating Housing Benefit is just one amongst an increasing number of disincentives for landlords to make their property available to claimants.

I'm not a cynic by nature, and I'm certainly not arguing that the welfare bill isn't excessive and needs to be reduced, but it is difficult, witnessing the brutal nature of the cuts the government is making, not to wonder if there isn't another agenda in play. They seem to be engaged in a form of "economic cleansing", driving the poor (for "poor" read "unemployed") out of areas where unemployment is still relatively low, but housing costs high, into areas where housing is still cheap but, almost inevitably, unemployment is high. This does nothing to improve their chances of finding work, and this "ghettoisation" of the poor can only result in more trouble, and greater costs, further down the line.
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Re: Housing Benefit Reform

Postby juliet » Sat Feb 25, 2012 2:56 pm

I totally agree Geometer, it feels really unfair. I think that people on welfare have hard times ahead! I really feel for people who genuinely can't work or can't find work. Where I work get 100's of applications for jobs that we advertise and it is tragic. I also think that the governments work programme is showing how difficult it is to find work. Grim up north at the moment!
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Re: Housing Benefit Reform

Postby Mojisola » Sat Feb 25, 2012 4:45 pm

Geometer wrote: She's not disabled, but she's deaf and epileptic, so she's certainly vulnerable.


If you know her well enough to suggest it, get a benefit check from an AgeUK advisor. She could be entitled to Attendance Allowance and/or Pension Credit which will give her some extra income each week.
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Re: Housing Benefit Reform

Postby Geometer » Sun Feb 26, 2012 11:10 am

Thanks, Mojisola. I'll mention it, but she's a canny old bird, and I suspect she's got her entitlements well sussed! :wink: :lol:
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Re: Housing Benefit Reform

Postby Conveyancer » Sun Feb 26, 2012 12:52 pm

Welcome to David Cameron's Big Society.

"From each according to their vulnerability, to each according to their greed."
If you have benefited from advice on this site please consider contributing to a cancer charity.
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Re: Housing Benefit Reform

Postby Snorkerz » Sat Mar 10, 2012 12:23 am

juliet wrote:Single room rent allowance (about £50 and might be called something different now) has been extended to people aged under 35 (was previously under 25). That means if you rent to any single person under 35, they will only get £50 a week to pay their rent. Maybe a good opportunity to go into the shared house market. Starts April 12 but some are protected for a year to give them time to find a new home.

Brought forward and introduced 1/1/12 - the rate for each area can be found here: https://lha-direct.voa.gov.uk/search.aspx

Bedroom tax - working age people under occupying will get a deduction for any extra rooms that they have so one to watch out for. Don't let any tenants under occupy unless they are aware of this new rule. I think that it kicks in in April 13.

This will apply only to socal housing. Private tenants can rent Buckingham Palace if they want - their benefit payment is limited by their circumstances, not the property they rent.

The switch from housing benefit payments direct to the landlord (with a couple of exceptions) so that the tenant is paid the money. Exceptions are probably going to be 'vulnerable' or where people have 8 weeks worth of arrears. So I think that will mean a lot of unpaid rent for those who haven't managed their 'own' money in the past.

Direct payment to tenants has been standard for several years. Indeed the changes last April increased the opportunities for landlords to be paid direct.

The switching of housing benefit to a 'housing element' payment as part of a monthly, paid in arrears 'universal credit' payment so where tenants are currently paid their benefit weekly/fortnightly - when they switch to universal credit a month in arrears they might not be able to manage for a while and again rent may go unpaid.

The pinning of universal credit to CPI rather than RPI - that will mean if you increase your rents in line with RPI at the moment, your tenant won't be able to keep up so you will have to consider CPI - think that it was about a 0.9% difference this year. I suppose private rents are flexible enough to be able to handle that?

I agree - although landlords have not been restricted to RPI increases so the chance of a bigger rent rise than benefit rise was always there.

More reasons to rent to people in work really and it feels like renting to benefit clients won't pay?

Not necessarily the case - An article soon to appear on the Property118 website states
I have personally built a successful portfolio by letting to LHA Tenants and the profits and cash flow exceed those I could have achieved with working tenants. In some areas rents are as much as 30% higher than market rents in the private rented sector
What makes YOU happy?
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Re: Housing Benefit Reform

Postby jencast » Wed Mar 14, 2012 3:25 pm

In my experience, the council has paid a higher rent than the private tenant and they were able to put up a bond of twice the monthly rent if I granted a 12 month ast. They are also paying me directly and have allowed me to discuss with the them any details regarding the tenants rent payments. I'll let you know how this turns out, since I have suffered damages from previous tenants where the deposits were below the damage totals.
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Re: Housing Benefit Reform

Postby Geometer » Tue Apr 24, 2012 10:21 pm

Geometer wrote:I'm not a cynic by nature, and I'm certainly not arguing that the welfare bill isn't excessive and needs to be reduced, but it is difficult, witnessing the brutal nature of the cuts the government is making, not to wonder if there isn't another agenda in play. They seem to be engaged in a form of "economic cleansing", driving the poor (for "poor" read "unemployed") out of areas where unemployment is still relatively low, but housing costs high, into areas where housing is still cheap but, almost inevitably, unemployment is high. This does nothing to improve their chances of finding work, and this "ghettoisation" of the poor can only result in more trouble, and greater costs, further down the line.


:cry: And so it begins...
http://www.bbc.co.uk/news/uk-politics-17821018
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Re: Housing Benefit Reform

Postby juliet » Wed Apr 25, 2012 6:53 am

It is all quite distressing for a lot of people - one thing that we have noticed (as a social landlord because I didn't make that clear on the OP) is that we are having to keep all of our small properties for anyone in work and we have stopped encouraging older people to move out of under occupied homes as they will still get full rent. It is all totally bizarre to say the least!

Our tenants are scared to death of the bedroom tax coming their way (or oblivious to it thinking that it doesn't apply to existing tenants).

We are also dreading direct payments and know that arrears will go through the roof - we will suddenly have about 50% more rent to collect at least but suppose that means more jobs.

At least we have plenty of water up north. Oh, and the steel is being produced again!
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Re: Housing Benefit Reform

Postby jencast » Fri May 09, 2014 12:24 pm

My last tenant was on benefits and because of the new reforms and a change in situation, she gave her notice to vacate. The council has been good regarding the damages claimed against the bond(even though I had to wait 4weeks to receive it). Would I do it again? Yes. She was a good tenant, rent paid by the council directly to me, damages deducted and agreed were witnessed by the council and settlement was fair.
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Re: Housing Benefit Reform

Postby jonahinoz » Mon May 12, 2014 8:15 am

Hi,

How is it that somebody cannot afford to buy a house, but they can afford to pay rent to a land lord who did buy that house, and is making a profit from the rent?

We are both in our 70s. Our combined pensions come to a little more than the SINGLE national average. We also get the Winter Fuel Allowance, but no other benefits. We can afford just about ANYTHING we could sensible want. We cannot afford EVERYTHING we could sensibly want. We have just been granted a mortgage, so we can move nearer to our daughter and grandchildren (husband gone walkabout). We have proved to the lenders that we can afford it comfortably.

On the other hand, we switch the central heating on in the evening, set it to no more than 20. If necessary, we cover our knees with travelling rugs. No great hardship, and it's our choice. We both pay income tax, which we assume provides benefits to those who are less frugal.

Yes, there are those who need our help. If HMG cuts down on those who DON'T need help, there will be more available for those that do.

John W
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Re: Housing Benefit Reform

Postby MacadamB53 » Mon May 12, 2014 11:40 am

Hi John,

How is it that somebody cannot afford to buy a house, but they can afford to pay rent to a land lord who did buy that house, and is making a profit from the rent?

erm, because the rental payments are lower than what the mortgage payments would be?
example:
landlord buys £100k property outright, rents it for £100 a month to individual who would pay £150 a month mortgage payment if Loan To Value was 80:20 (they had to borrow £80k)

or

because the tenant IS paying more per month but doesn't have enough capital to satisfy the lender (they don't have £20k)

hope that makes sense?

Kind regards, Mac
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Re: Housing Benefit Reform

Postby jonahinoz » Mon May 12, 2014 4:32 pm

Hi Mac,

Mmmmm! Trying to work some real figures (yours may be real, I haven't thought about it yet). I won't post if I'm wrong. :D

Say a £100,000 house, cos it's easy to do the sums.

Landlord has to find £20,000 deposit, borrows £80,000 at 4% (interest only), so £3,200 per year, which is £267 per calander month. He lets it to a tenant for your £400 per calandar month, makes £133 per month from his £20,000 deposit. You will notice that I'm not complicating things with overheads. I addition, his investment is appreciating by, say, 2% pa, which is another £167 per month. I won't complicate things with compound interest. So he has a total of £434 profit from his investment ... OK, he can't spent the £167 appreciastion .... YET.

But the point is, the tenant is paying £400 per month.

If the tennant had managed to find the £20,000 deposit, he would be paying £267 per month, plus capital. I'm not clever enough to work out what the capital repayments would be, but I could walk into my bank pick up a mortgage booklet which would tell me. Or I could ask Google, but they want to know everything bar my collar size. Whatever, the capital repayments will hurt ... but one day they will stop. Rent goes on for ever.

As you are aware, from our recent PM correspondence (public vote of thanks will come later) We are in our 70s, and have just had a mortgage approved. I think you can guess the price of the house. The mortgage is for £85,000 at 4% INTEREST ONLY. You can calculate what the deposit was. We managed to save that in the 12 years since my wife retired, including paying off our previous mortgage, buying three NEW cars, and wasting a few thoiusand. All from our pensions which are just a little more than a SINGLE average wage.

We are unable to take advantage of HMGs's Help to Buy. We are unable to take advantage of Shared Ownership, where you only have to find a deposit for the 25 to 30% that you are buying, with the remainder at what seems to be a very attractive rent. In fact both those schemes were competing against us. The Shared Ownership scheme seems to have taken the place of LA Housing, with both being run by Housing Associatons.

So, for the same £100,000 house, the prospective house buyer only has to find £6,000 deposit, but has to make both capital repayments on £24,000, and pay rent on the share of the house that he hasn't bought (which I suspect will be lower than the private sector). But his foot is on the housing ladder, and if he can be sensibly disciplined, one day it will all be his. In the mean time, will his assorted payments be less than £400 per month? Dunno!

Log onto http://www.rightmove.co.uk, click FOR SALE, search for Milton Keynes + 20 miles, click max price £100,000.

Er ... you may be right. My brain is hurting.

The Old Girl next door (age 92) moved into sheltered housing, put her house on the market. Three bed, two recep semi, with garage, pleasant street. House was clean, dry, and comfortable, albeit needing updating (storage rads, but gas in the street). After several months a developer bought it - £50,000. No doubt it will be let at £100+ per week.
John W
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