Thursday, Jul 16, 2009
Those poor slumlord .....
BBC News: Benefit tenants 'rip off' landlords
When the government started paying housing benefit to new private tenants rather than straight to their landlords last year, it was meant to give tenants more choice and help develop their budgeting skills - but instead it just means rents are not being paid, say some landlords.
Interesting that this article is written by the BBC Asian Correspondent.
Posted by tudorian @ 11:00 AM (1470 views) Add Comment
21 Comments
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1. peter_2008 said...
The more I think about it, the more I reckon the seemingly insignificant changing from government paying housing benefits to the landlords directly to paying tenants, will have a significant impact on house price in the long term. That is pushing it down.
Up until now, the rental market is effectively controlled by the government/local authority. The spineless civil servants’ unwillingness to negotiate a better price with the landlords made social renting a cash cow to the landlords. There is no competition on the landlord’s side and rent will NEVER fall below, say £400 per flat. That put a floor on the house price as well. Because if a house (no matter how crap it is) falls under £400 x 120 = £48000, It made prefect financial sense to buy it and rent that crap to benefit claimants and make nice money from taxpayers. This means neither people, who don’t claim benefits, can get rent less than £400. This pushes non-social housing price up as well.
But now the table has turned. The landlords have to deal with the thick skinned claimants rather than the “yes man” from the council. Even the honest claimants have incentive to get cheaper rent. Now, the landlords have to COMPETE to get money, which is something they probably have not done for the last 30-40 years. Competition always makes things cheaper. If social landlords can only get, say £350-£300 minimum instead of £400, that will drag down the non-social rent as well.
As most people buy hours based on how it compares with rent, that should eventual drag down the house price as well.
The best thing about this is that Benefit Claimants vs. Landlords is that Alien vs. Predator, highly entertaining!
2. mark wadsworth said...
Yet another reason for scrapping housing benefit for private tenants and freeing up a bit more social housing.
They can do this by easing the better off poor out of council housing (who can then snap up properties from slumlords who are forced to sell), or claim back all the social housing that's sublet privately, or stop giving all available units to Somalis and Afghans (OK, that's exaggerating - they only get a tenth of units that ceome vacant), or renovate all the empty units, or 'downsize' people once their kids leave home or eve, crazy thought, build more social housing.
I am sure they could easily free up a fifth of social housing if they did all these things, which means all HB claimants in private sector can have a council flat instead.
What's not to like?
3. uncle tom said...
Government needs to recognise that a significant percentage of the population are useless at managing money properly.
It doesn't help that many 'switched off' when maths was taught at school, probably because the curriculum lacked everyday relevance; or that a subject as fundamental as 'domestic finance' has never been taken seriously by the education establishment.
Many people find being paid monthly difficult, and stressful to handle; and would doubtless be happier if there was a return to weekly pay packets.
It would also be better if those in need of social housing, or housing benefit; were not billeted in private lets.
4. jonb said...
That's why LHA rent levels won't support the housing market as some people have said. Even though they are higher than what you get privately, most landlords would rather have private tenants.
5. Ab said...
I work for the benefits service for a local authority and and always ignorance is bliss.
So for your inforamtion
Yes there are some tenants who have not paid their rent to the landlord. After 8 weeks of non payment the landlord can request HB paid directly to them and then recover the money from their tenants through the legal system. I can assure you that it is not rife the majority of privately rented HB tenants are very capable of paying their rent and managing their affairs
MW I like your posts and they are very informative. People who work on low incomes should have a choice on where they live and can't afford a house why should they have to live in acouncil house. Sorry can't see that one working.
6. stillthinking said...
This is a good side effect. However, if LHA exists, then unavoidably rents will be pushed up to some degree. Using the private sector for social housing is an extremely expensive way of providing accomodation. The government should build the social housing that is needed, obviously this would be way cheaper.
Unfortunately for the UK, the government will always act to support high housing costs. We have to stand around watching and just hope we don't get hit by flying economic debris. Even now, the idea that cheap housing is socially beneficial just doesn't stand, there is no public support even.
7. doomwatch said...
I suspect "No DSS" will morph to "DSS welcome" in the coming months after official unemployment breaches 3 million.
8. paul said...
The tone and chosen quotes from the article are highly selective and biased. Interviewing and quoting a few reckless tenants is cheap sensationalist journalist tactics that have come to typify the kind of quality we see from the BBC around housing issues.
On those grounds, I refuse to take the issue seriously I'm afraid.
9. mander said...
The problem started with the bank offering the loan to the BTL with no equity and who never made money in her life before. Now should the tenant out if his benefits pay that huge rent or the bank should reposses that house and sell it at an affordable price to a family that will not default?
10. icarus said...
Why is this problem presented as if it's confined to HB tenants? Surely any tenant can get behind on rent or run off owing a month or two.
11. uncle tom said...
Paul,
A friend who now lives in Thailand, has a cottage in Yorkshire that has been let for several years to a lady, who I think is on incapacity benefits.
Everything was fine until the rules changed, the rent money was paid directly to him. Since then however, his tenant has been pocketing the cash, reasoning that if he kicks her out, the DSS will still have to find her somewhere to live..
..even if he gets compensated, he's not sure he will recover his legal costs, and the delightful lady is left laughing at the system..
12. jonb said...
Icarus,
Because housing benefit tenants are much more likely to do this. Yes, it does happen with other tenants as well sometimes.
13. the number cruncher said...
When I was a volunteer making my career (you had to in my profession) I had a landlord that stole my deposit (in Scotland it was allowed as one of the other tenants skipped off without paying the last months rent) and pocketed all the rent from my housing benefit so I had no power in the matter. The flat I had had a lot of problems and if I had the cash I would have withheld rent until they where fixed.
This is the real reason landlords hate the new system as they have to maintain their properties now otherwise face a rent strike. The vast majority of Housing Benefit should be paid to the tenants so they can negotiate lower prices and get better service. I am sure persistent offenders can be barred from receiving it directly
Just shows how the chattering classes/amateur landlords can pull off a biased article like this on the beeb.
14. Hmm said...
"Interesting that this article is written by the BBC Asian Correspondent"
What does that comment mean?
15. peeping tom said...
Housing benefit used to be paid directly to tenants and the local authority would cap it if it thought that the landlord was charging too much, not that that provided any incentive for the landlord to lower the rent.
16. inflation is eating my savings said...
This has been an orchestrated (or as s2r1- are you still there? would say, orchistrated) media thing. It has been all over local radio up here in Ecosse. Poor landlords.
17. Ndg said...
Who is the rental agreement / remuneration contract between? Is it between the landlord and the local council or the landlord and the person on benefit? Or a lovely fuzzy bit of both.
Just asking.
18. Ndg said...
The article just screams "don't give state government benefit money to your landlord" to anyone foolish enough (like me) to assume this message from the text and (unlike me) fail to honour their obligations.
If being on benefit and misappropriating government allocated tax payer money gives a person any such obligations.
19. techieman said...
Ab - I have no reason to doubt what you say but 2 things:
1. This issue's severity probably corelates to hot spots of depravation - i think a local authority in more affluent areas may have a different experience to deprived areas. Do you have numbers by Local authority - not just for default but also for arrears?
2. The government are very dumb to do this toward they end of a consumer led boom. Once that deflates all sorts of defaults happen without encouragement. So, although it may not be an issue now it probably will become more of one.
3. "recover the money from their tenants through the legal system". Erm right - and how is that gonna happen? A garnishee of other benefit perhaps? Please pacify my blissfull ignorance.
20. techieman said...
three things even!
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