Jump to content
House Price Crash Forum
Sign in to follow this  
garybug

Pocketing The Diffenece In Your Rent / Max Housing Benefit?

Recommended Posts

http://www.timesonline.co.uk/tol/news/poli...icle6812926.ece

This has been dressed up as 'Brown steals from the poor' - but it looks like something decent for once, but only because they cannot afford it:

"At the moment 300,000 people on low incomes are allowed to keep up to £780 a year of their housing allowance if they find accommodation that costs less than the maximum benefit. "

EH???

I claimed HB back in '98, and never heard of this.

Share this post


Link to post
Share on other sites
http://www.timesonline.co.uk/tol/news/poli...icle6812926.ece

This has been dressed up as 'Brown steals from the poor' - but it looks like something decent for once, but only because they cannot afford it:

"At the moment 300,000 people on low incomes are allowed to keep up to £780 a year of their housing allowance if they find accommodation that costs less than the maximum benefit. "

EH???

I claimed HB back in '98, and never heard of this.

Edited, misleading.

Edited by Confounded

Share this post


Link to post
Share on other sites

snap

Merge please.

So for finding accommodation that costs less than the maximum allowance tennants get to keep some money? So the taxpayer is paying people to shop around?

What's missing from this story is how much the taxpayer has saved by paying tennants in this way? Is the saving a 50/50 split?

Share this post


Link to post
Share on other sites
snap

So for finding accommodation that costs less than the maximum allowance tennants get to keep some money? So the taxpayer is paying people to shop around?

What's missing from this story is how much the taxpayer has saved by paying tennants in this way? Is the saving a 50/50 split?

I agree - best way of doing it -cuts out fraud as well ( HB is imo the biggest source of benefit fraud)...

Share this post


Link to post
Share on other sites

"What's missing from this story is how much the taxpayer has saved by paying tennants in this way? Is the saving a 50/50 split?"

No, what's missing from this story is how many tenants / landlords have been complicit in submitting a lower rent, then pocketing the difference? Is the RIP OFF a 50/50 split?

Share this post


Link to post
Share on other sites

Actually I wonder if this might push rents up? If an HB recipient can't keep the difference where's the incentive to negotiate rent downwards - might as well just give the LL the whole lot. :angry:

Share this post


Link to post
Share on other sites
Actually I wonder if this might push rents up? If an HB recipient can't keep the difference where's the incentive to negotiate rent downwards - might as well just give the LL the whole lot. :angry:

That would keep BTL happy.

Share this post


Link to post
Share on other sites

In case they don't merge the threads, copied from IRRs.....

--------------------------------------------------

We know Brown is a psychopath so that isn't news.

What is fascinating is further evidence of how little he understands markets. Remove the incentive to choose on price and rents will rise to the allowance. He really doesn't grasp any of this, does he? The implication for his ability to govern a market is staggering.

Share this post


Link to post
Share on other sites
Actually I wonder if this might push rents up? If an HB recipient can't keep the difference where's the incentive to negotiate rent downwards - might as well just give the LL the whole lot. :angry:

Edited my original post, it seems they want to abolish it!

What a farce.

Share this post


Link to post
Share on other sites
In case they don't merge the threads, copied from IRRs.....

--------------------------------------------------

We know Brown is a psychopath so that isn't news.

What is fascinating is further evidence of how little he understands markets. Remove the incentive to choose on price and rents will rise to the allowance. He really doesn't grasp any of this, does he? The implication for his ability to govern a market is staggering.

Just frightening isn't it, unless he is actually trying to put more props under the market! Which is sadly more likely the case. :ph34r:

Share this post


Link to post
Share on other sites
"What's missing from this story is how much the taxpayer has saved by paying tennants in this way? Is the saving a 50/50 split?"

No, what's missing from this story is how many tenants / landlords have been complicit in submitting a lower rent, then pocketing the difference? Is the RIP OFF a 50/50 split?

when I claimed housing benefit (granted this was 10 years ago) the maximum housing benefit was never as much as the full rent, and I had to top it up out of my jsa/income support. I thought the rule was that housing benefit never covered the full rent - there was some piddly amount they always deducted. I'm not sure why and always thought it was unfair, but if landlords and tenants are colluding in actually getting the benefit to cover the full rent then I think fair enough to be honest. It's hard enough surviving on benefits, not the cushy number so many on here seem to think it is.

Share this post


Link to post
Share on other sites

This is Local Housing Allowance which replaced Housing Benefit in most cases last year.

The aim was to reduce the cost of Housing Benefit and the idea was good.

Housing Benefit had two big problems:

It paid the requested rent - good news for landlords

It was paying for a single person (usually after a change of circumstance) to live in a 3 bed house

LHA replaced with this with:

A maximum rent based on the size of household and the local rent levels.

However if the renter could find somewhere cheaper they could pocket the difference up to a set limit.

This all sounds like a good idea to me that needs refinement as the upshot is lower costs, and if a way of getting those lower costs is partially incentivising the tenant to find somewhere cheaper I have no problem with that.

The big problems to be ironed out are:

What are the appropriate local rent levels?

How do you delineate local areas?

If these are addressed properly this will be a great replacement for HB.

Share this post


Link to post
Share on other sites
Housing Benefit had two big problems:

It paid the requested rent - good news for landlords

It was paying for a single person (usually after a change of circumstance) to live in a 3 bed house

No it didn't. Certainly not in 1991 when I was supposed to make up the difference between what the landlord wanted and what hb would pay.

LHA should match council rent levels only. Let the blinking landlords suffer and help the tax payer out a bit.

Share this post


Link to post
Share on other sites
What is fascinating is further evidence of how little he understands markets. Remove the incentive to choose on price and rents will rise to the allowance.

Indeed; it's back to the old system where landlords set the advertised rent at the maximum Housing Benefit would pay. A tenant claiming Housing Benefit had no incentive to negotiate a lower rent or shop around for a cheaper property. It wasn't uncommon to hear of landlords setting two rents -- with a higher rent being asked for prospective tenants who were eligible for maximum Housing Benefit.

Edited by CrashConnoisseur

Share this post


Link to post
Share on other sites
No it didn't. Certainly not in 1991 when I was supposed to make up the difference between what the landlord wanted and what hb would pay.

I wouldn't know the system in 91 but there is still a division between propert based and non-property based costs. So if you are in a flat paying a gas bill the communcla part will be paid but the flat's charge won't. This may be irrelevant but it's the only current bit I know where the full rental isn't paid.

LHA should match council rent levels only. Let the blinking landlords suffer and help the tax payer out a bit.

Would you then end up housing people in anything other than more expensive temporary accommodation?

I don't agree with the whole system anyway as it often puts unemployed people in a better position than low wage earners. But if you are going to have it then LHA looks like an improvement on HB IMHO.

Share this post


Link to post
Share on other sites
Just frightening isn't it, unless he is actually trying to put more props under the market! Which is sadly more likely the case. :ph34r:

One can't help but wonder. Having seen rents fall (for which the new Housing Benefit arrangements may be a contributing factor) they could be concerned about the impact on BTL mortgage defaults.

Edited by CrashConnoisseur

Share this post


Link to post
Share on other sites
LHA should match council rent levels only. Let the blinking landlords suffer and help the tax payer out a bit.

The policy over recent decades has been to raise council and Housing Association rents towards market levels (thus pushing even more social tenants into the benefits trap where work isn't economically viable).

Edited for clarification: "to" -> "towards"

Edited by CrashConnoisseur

Share this post


Link to post
Share on other sites
when I claimed housing benefit (granted this was 10 years ago) the maximum housing benefit was never as much as the full rent, and I had to top it up out of my jsa/income support. I thought the rule was that housing benefit never covered the full rent - there was some piddly amount they always deducted.

That was never a rule; if you could find accomodation at an average rent or below (as determined by the District Valuer) the Housing Benefit would pay in full (assuming you were eligible). Deductions were made, then as now, for any services included in the rent, most commonly water rates.

Under the new system, introduced in April 2007, the District Valuer sets a fixed Local Housing Allowance (LHA) for each type of property based on the average rent for each area (excluding upmarket properties). This reduced bureaucracy since claims no longer have to be sent to the valuation office for individual determination of the acceptable rent.

Edited by CrashConnoisseur

Share this post


Link to post
Share on other sites
The policy over recent decades has been to raise council and Housing Association rents to market levels (thus pushing even more social tenants into the benefits trap where work isn't economically viable).

Social housing is just over £300 a month for a 3 bed semi

Private landlord on same street tries to get 650. (he's been knocked down on one to 550 though which is a start)

Share this post


Link to post
Share on other sites
Social housing is just over £300 a month for a 3 bed semi

Private landlord on same street tries to get 650. (he's been knocked down on one to 550 though which is a start)

Yes, there's still a large gap in many areas particularly with council houses. However, social rents have been forced up over recent decades as rent subsidies have been phased out (council housing is now ring-fenced). Housing Associations have pushed through rent rises that were well above inflation. This has had the effect of raising social rents towards private sector rent levels. I've edited my previous post to clarify that this policy has not (yet) raised social rents to the same level as private rents.

Share this post


Link to post
Share on other sites
In case they don't merge the threads, copied from IRRs.....

--------------------------------------------------

We know Brown is a psychopath so that isn't news.

What is fascinating is further evidence of how little he understands markets. Remove the incentive to choose on price and rents will rise to the allowance. He really doesn't grasp any of this, does he? The implication for his ability to govern a market is staggering.

What is even worse it shows how clueless the whole treasury department is. They are estimating on saving 100+million on this. Whats the odds on the savings being less than 10mil within two years.

Initially the housing benefit claimants wont shop around and instead go for the best quality housing closest to the maximum claimable amount. Zeroing the savings. I know that's what i would do.

After a couple years the lack of incentive to negotiate down rents would be felt, causing rents to increase in real terms relative to the current system.

Government looses, renters loose, the poor loose, while the BTL brigade and landlords benefit. Great eh?

Share this post


Link to post
Share on other sites
No, what's missing from this story is how many tenants / landlords have been complicit in submitting a lower rent, then pocketing the difference? Is the RIP OFF a 50/50 split?

If next year's HB levels follow the (reported) market price, the landlord would in fact be shooting himself in the foot by doing this.

Share this post


Link to post
Share on other sites

Frank Field was on the radio at lunchtime talking about this....

It was introduced last year, and you can pocket a maximum of £15/week - the average gets about £10/week. It's to encourage tenants to haggle LLs down on the rent - the government has actually saved money with this scheme - it has pushed rents down overall in areas where lots of HB recipients live, which is good for everyone (apart from the LLs...) otherwise the LL just sets the rent based on the amount of housing benefit - no one other than the LL benefits.

The lady commenting after Mr Field pointed out that the amount saved by doing the U turn on this is a very small drop in the ocean - but that maybe the government are needing to save every last drop they can....

Share this post


Link to post
Share on other sites
"What's missing from this story is how much the taxpayer has saved by paying tennants in this way? Is the saving a 50/50 split?"

No, what's missing from this story is how many tenants / landlords have been complicit in submitting a lower rent, then pocketing the difference? Is the RIP OFF a 50/50 split?

How can the landlord possibly be any better off if he enters into this claimed scam.

option 1) The LL changes the maximum rent of e.g. 100 pounds per week and thus gets 100 pounds per week.

option 2) the landlord charges a lower rent of 85 pounds meaning that the tenant gets 15 pounds government bonus which he shares with the landlord 50/50, so the LL gets 92 pounds 50.

How does this scam work again?

tim

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   296 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.