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Ride_on

Housing Benefit Cut

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What is going to happen to the 10's of thousands of private renter no longer able to afford to rent their houses / flats? Are the LLs going to suddenly find 10's of thousands of renters with more money?

I doubt it, the amount of money available for rent is going down, rents will have to come down. Rents have been forced up by the weak approval system and direct payments to LLs. I'd say we might see some LL selling up, along with the reduced ability to milk it for rate holiday aswell.

The news seemed to portray single unemployed professionals living in very nice houses, but at £300/month. That was much lower than I thought possible.

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[quote name='Ride_on' timestamp='1325808890' post='3224798']
What is going to happen to the 10's of thousands of private renter no longer able to afford to rent their houses / flats? Are the LLs going to suddenly find 10's of thousands of renters with more money?

I doubt it, the amount of money available for rent is going down, rents will have to come down. Rents have been forced up by the weak approval system and direct payments to LLs. I'd say we might see some LL selling up, along with the reduced ability to milk it for rate holiday aswell.

The news seemed to portray single unemployed professionals living in very nice houses, but at £300/month. That was much lower than I thought possible.
[/quote]
A better question is what is going to happen to the 10's of thousands of numpty BTL landlords who couldn't spot a selling scam if it smacked them square in the face.

The renters will be fine, they will just move to a house where the land lord has taken the hit and is being reasonable.

The idiot BTL landlord on the other hand.....

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[quote name='Ride_on' timestamp='1325808890' post='3224798']
What is going to happen to the 10's of thousands of private renter no longer able to afford to rent their houses / flats? Are the LLs going to suddenly find 10's of thousands of renters with more money?

I doubt it, the amount of money available for rent is going down, rents will have to come down. Rents have been forced up by the weak approval system and direct payments to LLs. I'd say we might see some LL selling up, along with the reduced ability to milk it for rate holiday aswell.

The news seemed to portray single unemployed professionals living in very nice houses, but at £300/month. That was much lower than I thought possible.
[/quote]

what will happen to all of us if the UK government will run out of money such as the Greek government, because both countries spend more than they earn ????

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I think that this could have far bigger consequences for the housing market than some may think. If the facts are correct that up to 70% of the private rental sector in NI is funded by housing benefit then there will be a mass of LL's papping themselves that the government is no longer going to fund on average £500 odd quid towards the rental income that they receive. They will either have to lower the rent ... which many will not be able to afford to do due to foolishly buying an investment property at the peak of the market and having large loan repayments themselves (likely on Interest only repayments), or they will have to attempt to sell up. Given that a high majority of LL's will be in negative equity this is unlikely to be a viable option as well.

Rental costs have been kept artificially high IMO due to the ridiculously high housing benefit support by the government. The sooner this support at this level is withdrawn the better.

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[b]Impact of housing benefit changes[/b]

http://www.housepricecrash.co.uk/forum/index.php?showtopic=105924&st=3195

If it's a choice between taking a reduced rent or no rent, then I think I know what decision the landlord will make in those circumstances”

Nelson McCausland Social development minister

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Some of points posted above where actually the point I was making, I guess I was feeling a bit tongue in cheek after seeing a particular media story / documentary that was predicting mass forced moves of those poor renters.

I have predicted this reduction some time ago, my point has always been that the bottom of the purchase market is held up by unreasonably high rents given out on benefits, you could rent quadruple the 'value' for alot less than double the price. The relationship should be more linear to RV (for example). And that once the gov't realise this the handouts will reduce, the yield calcs (proposed by certain bulls a few years back) will no longer hold up.

Another point has always been that the rental market is very dynamic and clearly represents the actual money people have to spare on accommodation, its set by the market not the LLs. Hence reducing benefits will reduce rents and house prices.

I do feel sorry for the LLs, they were suckered into this as a way to avoid buying more council houses which Maggie decided to give away and not build steadily for the increase in population. The Gov't is pulling the carpet out from underneath them now that all the borrowed money has failed to actually grow the economy.

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[quote name='Ride_on' timestamp='1329700815' post='3266143']
Some of points posted above where actually the point I was making, I guess I was feeling a bit tongue in cheek after seeing a particular media story / documentary that was predicting mass forced moves of those poor renters.

I have predicted this reduction some time ago, my point has always been that the bottom of the purchase market is held up by unreasonably high rents given out on benefits, you could rent quadruple the 'value' for alot less than double the price. The relationship should be more linear to RV (for example). And that once the gov't realise this the handouts will reduce, the yield calcs (proposed by certain bulls a few years back) will no longer hold up.

Another point has always been that the rental market is very dynamic and clearly represents the actual money people have to spare on accommodation, its set by the market not the LLs. Hence reducing benefits will reduce rents and house prices.

I do feel sorry for the LLs, they were suckered into this as a way to avoid buying more council houses which Maggie decided to give away and not build steadily for the increase in population. The Gov't is pulling the carpet out from underneath them now that all the borrowed money has failed to actually grow the economy.
[/quote]

Good post. I agree ... with approx 70% of Private Rental market being paid by housing benefit it is no skin off the tenants nose if it is £ £500+ per month as they dont have to pay it. This keeps rents at an artificially high level IMO. I feel sorry for the other 30% who have to pay these rents out of their wages. With the current cost of living I just cant see how it is deemed affordable at these levels.

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[quote name='tinbin' timestamp='1329842285' post='3267350']
Good post. I agree ... with approx 70% of Private Rental market being paid by housing benefit it is no skin off the tenants nose if it is £ £500+ per month as they dont have to pay it. This keeps rents at an artificially high level IMO. I feel sorry for the other 30% who have to pay these rents out of their wages. With the current cost of living I just cant see how it is deemed affordable at these levels.
[/quote]
HB underpins capital values.

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[quote name='2buyornot2buy' timestamp='1329842526' post='3267354']
HB underpins capital values.
[/quote]
It hasnt done much of a job of it

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[quote name='BelfastVI' timestamp='1330078208' post='3269576']
It hasnt done much of a job of it
[/quote]

With the average wage at 23K and the average house at 137K - I'd say it's not done too badly.

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At June 2011:

Total claimants 157,808

Total public rented 43.3% (68,330)
Total private rented 56.6% (89,319)

Average weekly entitlement
- Public rented £60.09
- Private rented £79.15 x 52/12 = [b]£343 per month[/b](not £500).

The average private rent in the Belfast MPA is around £550 per month. (I imagine its lower outside the BMA). Therefore the average housing benefit is almost 40% lower than the average private sector rent. Whether you agree with the concept of housing benefit is one thing but I for one would not describe it as [i]'ridiculously high housing benefit'[/i]

The private sector rental market has risen. That is clear. In 2001 there were approximately 44,000 privately rented houses. This has increased to 113,000. Is that a direct consequence of the boom or has the fact that the government has dramatically reduced its public housing stock had an effect. The slack has been taken up by the private sector.

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[quote name='2buyornot2buy' timestamp='1330079310' post='3269598']
With the average wage at 23K and the average house at 137K - I'd say it's not done too badly.
[/quote]
Captial values have fallen by up to 50%.

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[quote name='BelfastVI' timestamp='1330080933' post='3269613']
Captial values have fallen by up to 50%.
[/quote]
And still out of reach of the "average".

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[quote name='BelfastVI' timestamp='1330080876' post='3269611']
At June 2011:

Total claimants 157,808

Total public rented 43.3% (68,330)
Total private rented 56.6% (89,319)

Average weekly entitlement
- Public rented £60.09
- Private rented £79.15 x 52/12 = [b]£343 per month[/b](not £500).

The average private rent in the Belfast MPA is around £550 per month. (I imagine its lower outside the BMA). Therefore the average housing benefit is almost 40% lower than the average private sector rent. Whether you agree with the concept of housing benefit is one thing but I for one would not describe it as [i]'ridiculously high housing benefit'[/i]

The private sector rental market has risen. That is clear. In 2001 there were approximately 44,000 privately rented houses. This has increased to 113,000. Is that a direct consequence of the boom or has the fact that the government has dramatically reduced its public housing stock had an effect. The slack has been taken up by the private sector.
[/quote]

300 million a year. £1300 per year cost to every working person in NI.


Don't know where you got the average belfast rent from there BVI? Tell me it's not citylet?

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[quote name='BelfastVI' timestamp='1330080876' post='3269611']

Average weekly entitlement
- Public rented £60.09
- Private rented £79.15 x 52/12 = [b]£343 per month[/b](not £500).

The average private rent in the Belfast MPA is around £550 per month. (I imagine its lower outside the BMA). Therefore the average housing benefit is almost 40% lower than the average private sector rent. Whether you agree with the concept of housing benefit is one thing but I for one would not describe it as [i]'ridiculously high housing benefit'[/i]
[/quote]

Look ... a single parent with 2 kids on income support is entitled to receive up to £550 per month rent. If you want to manipulate figures, averages and so on then be my guest.

During the boom years when every Tom, Dick & Harry threw their hat into the investment property ring they typically bought the normal 3 bed semi's & townhouses in the new developments and rented them out privately. These type of properties are typically what Mr & Mrs Average aspire to live in but find that they have to buy at unaffordable levels or pay a rent of £550, which the person next door who doesnt go to work pays nothing for. Life is fair isn't it.

Its funny how the rents for these properties are typically £550 per month ... and guess what ... SURPRISE!! ... the housing benefit will pay £550 per month. How many of these properties are filled with exactly the type of client that I am mentioning??? Loads. Find me a statistic for that to say otherwise.

If housing benefit didn't pay up to £550 then the rents for same would drop ... IMO anyway.

If you dont believe me check out the calculator for yourself.

http://www.nihe.gov.uk/index/housingbenefit.htm Edited by tinbin

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[quote name='tinbin' timestamp='1330082794' post='3269644']
Look ... a single parent with 2 kids on income support is entitled to receive up to £550 per month rent. If you want to manipulate figures, averages and so on then be my guest.

During the boom years when every Tom, Dick & Harry threw their hat into the investment property ring they typically bought the normal 3 bed semi's & townhouses in the new developments and rented them out privately. These type of properties are typically what Mr & Mrs Average aspire to live in but find that they have to buy at unaffordable levels or pay a rent of £550, which the person next door who doesnt go to work pays nothing for. Life is fair isn't it.

Its funny how the rents for these properties are typically £550 per month ... and guess what ... SURPRISE!! ... the housing benefit will pay £550 per month. How many of these properties are filled with exactly the type of client that I am mentioning??? Loads. Find me a statistic for that to say otherwise.

If housing benefit didn't pay up to £550 then the rents for same would drop ... IMO anyway.

If you dont believe me check out the calculator for yourself.

http://www.nihe.gov.uk/index/housingbenefit.htm
[/quote]
Great post

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[quote name='tinbin' timestamp='1330082794' post='3269644']
If housing benefit didn't pay up to £550 then the rents for same would drop ... IMO anyway.
[/quote]

... you can't do that! It could cause house prices to fall too.:unsure:

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[url="http://www.nihe.gov.uk/rental_report_jan-june_09.pdf"]http://www.nihe.gov.uk/rental_report_jan-june_09.pdf[/url][quote name='2buyornot2buy' timestamp='1330082074' post='3269634']



Don't know where you got the average belfast rent from there BVI? Tell me it's not citylet?
[/quote]

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[quote name='tinbin' timestamp='1330082794' post='3269644']
Look ... a single parent with 2 kids on income support is entitled to receive up to £550 per month rent. If you want to manipulate figures, averages and so on then be my guest.


[/quote]
I havnt manipulated the figures, averages or so on. I have reported the facts as they are presented by the Government themselves.
[i]Average weekly entitlement
- Public rented [i](Housing Associations and the Housing Executive themselves[/i]) £60.09
- Private rented £79.15 x 52/12 = £343 per month.
[/i]
I assume the average person on benifets is perhaps not a single parent with 2 kids and is perhaps more likely to be a single bloke. He may well have 2 or more kids but that may be someone elses problem.

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[quote name='BelfastVI' timestamp='1330098262' post='3269834']
[url="http://www.nihe.gov.uk/rental_report_jan-june_09.pdf"]http://www.nihe.gov.uk/rental_report_jan-june_09.pdf[/url]
[/quote]

This out yesterday on Housing Benefit in Northern Ireland;

"During 2010/11 we paid out a total of £573.3m in Housing Benefit. £211.9m was paid in respect of public sector claims and £361.4m in respect of private sector claims (this includes payments for housing association tenant claims). This was an increase of 10.7% over the previous year. The number of people receiving Housing Benefit increased by 4.3% during the year to a total of 156,991 (68,121 in Housing Executive tenancies, 22,395 in housing association tenancies and 66,475 in the private rented sector).
In addition, a further £2.2m was paid to 17,867 Rate Relief claimants and £0.5m was paid to 4,147 Lone Pensioner Allowance claimants.
We continued our efforts to reduce the level of fraudulent claims and during the year 276 cases were referred to the Benefit Investigation Service of the Social Security Agency for investigation.
The level of overpayments increased from £23.4m to stand at £26.9m at the end of the year. During the year overpayments amounting to £18.4m were identified and £13.1m was recovered with a further £1.8m being written off."

So a rise of 4.3% in claims but a rise of 10.7% in the money....
Go figure.

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[quote name='2buyornot2buy' timestamp='1330082074' post='3269634']
300 million a year. £1300 per year cost to every working person in NI.

[/quote]
Depending on which report you read there are between 700,000 and 800,000 people employed in NI. (I imagine the voluntary sector has something to do with the difference).
If the Housing benefit bill is £300m per year, as you say. That would average as £430 per working person in NI.

Edit: Post above will change this estimate to £820 per working person in NI. Edited by BelfastVI

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[quote name='tinbin' timestamp='1330082794' post='3269644']
Look ... a single parent with 2 kids on income support is entitled to receive up to £550 per month rent. If you want to manipulate figures, averages and so on then be my guest.


[/quote]

Not in Belfast.

The calulator in your link does not allow for LHA area rates. You will not get any more housing benefit than the rate shown for your area.

http://www.nihe.gov.uk/index/benefits/lha/current_lha_rates.htm

A claimant or landlord cannot appeal against the levels of LHA set.

The bottom 30% of properties within the rental market are used to calulate the LHA rates for a given area. By calculating LHA this way housing benefit should be kept below the average rental price in that area.

Don't know how you get to £550 per month for a single person with 2 kids, when the LHA for a three bedroom house is £104.46 per week for Belfast, £452.66 per calander month (assuming the single person and the 2 kids fall into the criteria for a 3 bedroom property). If the single person is on income support, taxable benefits or gets child maintenance this will have an effect on any rate relief they are entitled to.



Just saying.

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[quote name='S S' timestamp='1330100200' post='3269862']
Not in Belfast.

The calulator in your link does not allow for LHA area rates. You will not get any more housing benefit than the rate shown for your area.

http://www.nihe.gov.uk/index/benefits/lha/current_lha_rates.htm

A claimant or landlord cannot appeal against the levels of LHA set.

The bottom 30% of properties within the rental market are used to calulate the LHA rates for a given area. By calculating LHA this way housing benefit should be kept below the average rental price in that area.

Don't know how you get to £550 per month for a single person with 2 kids, when the LHA for a three bedroom house is £104.46 per week for Belfast, £452.66 per calander month (assuming the single person and the 2 kids fall into the criteria for a 3 bedroom property). If the single person is on income support, taxable benefits or gets child maintenance this will have an effect on any rate relief they are entitled to.



Just saying.
[/quote]


I think your kinda missing the point. It is impossible to cover off every scenario, in every area, but the underlying point remains the same ... which I note no-one has challenged

[i]During the boom years when every Tom, Dick & Harry threw their hat into the investment property ring they typically bought the normal 3 bed semi's & townhouses in the new developments and rented them out privately. These type of properties are typically what Mr & Mrs Average aspire to live in but find that they have to buy at unaffordable levels or pay a rent of £550, which the person next door who doesnt go to work pays nothing for. Life is fair isn't it. How many of these properties are filled with exactly the type of client that I am mentioning??? Loads. Find me a statistic for that to say otherwise[/i].

It is splitting hairs and a side issue IMO to start a debate over the EXACT amount a single person with 2 kids is entitled to, even if I did use it as an example. So the odd person with 2 kids has to find £20 a week out of their tax credits, DLA, Incapacity benefit,Carers allowance or Income Support. Excuse me if i dont shed a tear for their hardship!

I SEE this first hand, I SEE what ppl are claiming. I dont know how they do it... but they do. I will never change my views on this matter based on what I have seen. I have seen ppl getting Housing Benefit actually paid to them on top of the rent because they are supposed ENTITLED to it because they have boys and girls and god forbid the kids have 2 share bedrooms. Thats not even looking into those who claim they have disabled children, carers allowance etc etc. My gripe is this leads to the detriment of Mr & Mrs Average who have to pay full rents at unaffordable levels

If you dont get it ... you dont get it.

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