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koala_bear

First Effects Of The Housing Benefit Axe In Action

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First time poster, but 4.5 years reading HPC.

First effects of the Housing Benefit Axe in action:

Former neighbour up the street bought himself a bigger house (with his retail business profits and no mortgage) and kept his old house (had paid off mortgage, 4 bed detached) which he has let out for ~5 years, i.e. not BTL and very astute.

After the old tenants moved out about 4 weeks ago he had agreed to let the place out in less than 24 hours to someone who by the description he gave was obviously on housing benefit but they had yet to move in while he had it redecorated etc.

The agreed rental (I saw what was asked on the EA website before it was pulled) was pretty stupid and above the new future threshold.

Yesterday evening a more upmarket EA turned up in their branded car and a new sign was staked into the ground first thing this morning, the new advertised price is below the future threshold.

The original prospective tenant obviously knew they wouldn't be able to afford the rent at some point in the future and walked away while they could.

The LL could afford to take less rent as he has no mortgage to worry about.

The HB axe is already working have faith bears!

More bear food:

Another estate agent (green & yellow minis) has been trying to sell an identical house near by for stupid money and it has had no offers since late march at this price. The owners were in it to flip it, they bought it off the government as a criminal asset seizure and are being pursued by the council for illegal building works during their 2.5 years there!

Anyone else witnessed similar happenings?

(keep you eyes open)

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First time poster, but 4.5 years reading HPC.

First effects of the Housing Benefit Axe in action:

Former neighbour up the street bought himself a bigger house (with his retail business profits and no mortgage) and kept his old house (had paid off mortgage, 4 bed detached) which he has let out for ~5 years, i.e. not BTL and very astute.

After the old tenants moved out about 4 weeks ago he had agreed to let the place out in less than 24 hours to someone who by the description he gave was obviously on housing benefit but they had yet to move in while he had it redecorated etc.

The agreed rental (I saw what was asked on the EA website before it was pulled) was pretty stupid and above the new future threshold.

Yesterday evening a more upmarket EA turned up in their branded car and a new sign was staked into the ground first thing this morning, the new advertised price is below the future threshold.

The original prospective tenant obviously knew they wouldn't be able to afford the rent at some point in the future and walked away while they could.

The LL could afford to take less rent as he has no mortgage to worry about.

The HB axe is already working have faith bears!

Could well be as you say. However, do you know what the previous tenants were paying, and is the new rental more, or less? It's possible that being a single-property LL (?presumably, from what you say) that he was astute enough to decide that that the extra money wasn't enough to tempt him to take a HB tenant. Lots of LLs won't touch them with a bargepole as higher risk, and many BTL mortgages specifically exclude them ( I know that doesn't apply to him, but the attitude to HB tenants as riskier is very prevalent.)

Back in the day when the HB was paid direct to the LL it wasn't so bad (though even then there were major headaches about overpayments) but now you have to take an 8-week hit before you can ask for it to be paid direct, then all the administrative hassle.....

The rental fall may be more apparent than real - a blip caused by a temptation to make a quick buck, followed by maturer reflection!

Disclaimer - yes, I know there are many and worthy HB tenants. But a greater % of them are likely to have problems simply because they are low-paid / unemployed and therefore less likely to have any fall-back position if life throws them a nasty / expensive turn. If, for example, they need their car to get to work and it breaks down, they will probably choose to get it repaired rather than pay their rent.

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My husband was talking about HB axe too koala_bear . I think you both might be onto something....I know a lot of landlords avoid HB tenants, rightly or wrongly, but these HB tenents must be renting off somebody. How will these landlords feel if the HB is going to restricted/reduced in future years. I have to say, I agree it will have some effect on house prices and take the heat out. There seems to be a lot of things that are going to take the heat out and cause a crash, this is very likely to be one of them....but by the time a crash comes people still won't get what caused it!

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My husband was talking about HB axe too koala_bear . I think you both might be onto something....I know a lot of landlords avoid HB tenants, rightly or wrongly, but these HB tenents must be renting off somebody. How will these landlords feel if the HB is going to restricted/reduced in future years. I have to say, I agree it will have some effect on house prices and take the heat out. There seems to be a lot of things that are going to take the heat out and cause a crash, this is very likely to be one of them....but by the time a crash comes people still won't get what caused it!

Don't forget that if someone rents a property while not on HB, then has their hours reduced or whatever and becomes eligible, there is no reason that the LL should know about it (this was part of the idea of paying direct to the tenant - human dignity etc). It would only be if the tenant defaults that the LL would be likely to find out. What happens then depends on the LL - some would cut their losses and issue a S21 pronto (or asap); others might be more sympathetic if the tenant had been there for some time.

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Don't forget that if someone rents a property while not on HB, then has their hours reduced or whatever and becomes eligible, there is no reason that the LL should know about it (this was part of the idea of paying direct to the tenant - human dignity etc). It would only be if the tenant defaults that the LL would be likely to find out. What happens then depends on the LL - some would cut their losses and issue a S21 pronto (or asap); others might be more sympathetic if the tenant had been there for some time.

Oh yes, I know landlords may or may not know they have a HB tenant, (I became sick in the middle of a tenancy and had to claim housing benefit for a few months) but all I am saying is the HB tenants are out there and what they can pay will affect what landlords can earn. And what landlords can earn affects what the landlord will pay when buying a flat/house. So I am guessing if HB goes down and private tenants may also be suffering wage cuts - this will likely lead to house prices falling - given that BTL is a big sector of the housing market.

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Could well be as you say. However, do you know what the previous tenants were paying, and is the new rental more, or less? It's possible that being a single-property LL (?presumably, from what you say) that he was astute enough to decide that that the extra money wasn't enough to tempt him to take a HB tenant. Lots of LLs won't touch them with a bargepole as higher risk, and many BTL mortgages specifically exclude them ( I know that doesn't apply to him, but the attitude to HB tenants as riskier is very prevalent.)

Back in the day when the HB was paid direct to the LL it wasn't so bad (though even then there were major headaches about overpayments) but now you have to take an 8-week hit before you can ask for it to be paid direct, then all the administrative hassle.....

The rental fall may be more apparent than real - a blip caused by a temptation to make a quick buck, followed by maturer reflection!

Disclaimer - yes, I know there are many and worthy HB tenants. But a greater % of them are likely to have problems simply because they are low-paid / unemployed and therefore less likely to have any fall-back position if life throws them a nasty / expensive turn. If, for example, they need their car to get to work and it breaks down, they will probably choose to get it repaired rather than pay their rent.

Sorry, but how can that be legal?

I know I might be taking up a losing cause on HPC, but housing benefit claimants are going to have a hard enough time over the coming years (competing for the bottom 30% of properties rather than the bottom 50%). How can it possibly be considered legal to discriminate against them?

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What happens then depends on the LL - some would cut their losses and issue a S21 pronto (or asap); others might be more sympathetic if the tenant had been there for some time.

From my perspective the reluctance I have regarding housing benefit claimants is the perceived risk that they will not look after my property reasonably.

This has been borne out in my personal experience by the way the only two tenants who ever caused me problems were both in receipt of LHA.

If a tenant behaved in a responsible way and through ill fortune had to claim housing benefit there is no question of terminating the tenancy. It is not the source of the money to pay the rent, but the way the tenant behaves that is the determining factor for me.

As regards the legality, as a private landlord I can't be forced to let my house to someone I don't want to. The issue in law is that I can't openly admit that I won't accept the tenant because of one of a specified type of discriminatory reasons.

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This sentence sums it up for me:

less than 24 hours to someone who by the description he gave was obviously on housing benefit but they had yet to move in while he had it redecorated etc.

If true (and I know the OP is only guessing here), but we have a situation where someone in receipt of benefits is getting their future house done up, effectively at our expense. Shabby walls are clearly against their human rights or something. I seem to remember looking for accommodation and deliberately looking for scruffy places as they would be cheaper - indeed, occasionally getting the landlord to drop the several hundred quid of decorating expenses in exchange for £20 off the rent. Times seem to have changed....

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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