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Lord Freud: Housing Benefit Landlords Are Ripping Off The System

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http://www.telegraph.co.uk/finance/economics/8069810/Lord-Freud-Housing-benefit-landlords-are-ripping-off-the-system.html

Private landlords will pocket almost £8.5bn from the taxpayer this year through housing benefit - more than a third of the total £21.5bn bill, according to figures from the Department for Work & Pensions (DWP).

In the past decade, the cost of providing housing to claimants through the private rented sector has soared by 36pc above the rate of inflation to £5,720. Other providers of social accommodation have raised their charges by just 19pc over inflation to £3,991.

Lord Freud said: "This confirms what we have long suspected, that some unscrupulous landlords are charging benefit claimants over the odds to make a quick buck at the expense of the taxpayer."

The housing benefit bill has exploded in the past decade, rising at 50pc above the rate of inflation to £21.5bn as both claimants and rents have increased, and is now larger than the bill for the Army and Royal Navy combined. Each working adult is contributing £689 a year.

The Coalition plans to save £1.77bn a year by cutting the weekly allowance from £2,000 to £400, among other measures. Further changes may be introduced in this week's spending review.

A DWP study, Low Income Working Households In The Private Rented Sector, found that, on average, private landlords charge higher rents to housing benefit claimants than working adults in equivalent accommodation, but provide worse conditions.

The research also offered compelling evidence that the benefit is distorting incentives to work, underlining the need for reform. "[Low income working] Households with children aged under 16 do appear to be worse off in terms of the property size that they occupy and the rates they would be entitled to if they were eligible for housing benefit," the study said.

According to the DWP, "Some private landlords specifically target the housing benefit sub-market because they know they can command higher rents from these tenants... causing a knock-on effect on rents in the area."

Making matters worse, many private landlords are said to have bought council housing stock off local authorities and then rented it back as social housing.

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well thank the Lord, at last some PR against the VI bleating we have had since the announcement of housing benefit cuts that all these poor people will be thrown out on the steets because landlords couldn't possibly take a rent cut.

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Each working adult is contributing £689 a year.

Haha. You thought you could avoid paying the rentiers by buying a house?

Nope. You still pay them almost £700 a year.

Because the state says you must.

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Even the social landlords are in on it.

52% of my unemployment benefits are housing benefit. A further 13% are council tax benefit.

The area I live has some of the lowest house prices and rents in the country.

And 25% unemployment to boot!

(And that is the 16-60 year olds)

Edited by Unemployed Youth

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In North London there is the ridiculous situation of rents actually being higher in the benefit slums than in much nicer areas where people actually pay their own rent.

Distortions are due to the way the LHA is calculated for each Broad Market Rental Area. If you have a place with 3 parts - a benefit slum, a middle class area and a high end area then the benefit slum landlord will command rents at the mid point of the middle class and high end.

Bringing in the 30th percentile will help but not eliminate the problem.

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Maybe the time has come for a UK version of the Tea Party.

The 'Tea and Cucumber Sandwich Party' ?

As your average British person has had a financial liability equal to a cucumber being sandwiched up their rear end by the banksters, media /corp vi's & mp's

:angry:

Edited by Saving For a Space Ship

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EXCELLENT news! Thanks for posting it DB!

FULL OFFICIAL REPORT: http://research.dwp.gov.uk/asd/asd5/rports2009-2010/rrep698.pdf

It is more than just one guy getting it. He is the Minister for Welfare Reform! And it confirms, again, a whole new direction from the new gov. The whole government must be in tune with it.

And publicised in the Telegraph (close to the new gov.), 2 days before the Spending Review!

They are obviously preparing the public opinion for what is coming.

:D:D:D

And they got the whole story! Even the "knock-on effect on rents in the area"! Affecting the rents paid by working people renting privately! (Declaring interest here: this is my case.)

According to the DWP, "Some private landlords specifically target the housing benefit sub-market because they know they can command higher rents from these tenants... causing a knock-on effect on rents in the area."
Edited by Tired of Waiting

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This scam has gone on for FAR TOO LONG -- and goes a long way to explain the absolutely RIDICULOUS and RUINOUS levels of rent in the UK. The sooner this is all nipped in the bud, the better. :angry: :angry:

+ 1

This subsidy has also pushed up the prices of properties, via yield!

It's been a major prop to the whole housing market.

Edited by Tired of Waiting

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well thank the Lord, at last some PR against the VI bleating we have had since the announcement of housing benefit cuts that all these poor people will be thrown out on the steets because landlords couldn't possibly take a rent cut.

Exactly!

Now let's see if the other papers will report on it, particularly The Guardian and The Independent. Will they favour landlords?! Or benefits cuts?! :lol:

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Lord Freud said: "This confirms what we have long suspected, that some unscrupulous landlords are charging benefit claimants over the odds to make a quick buck at the expense of the taxpayer."

Well, DUH!

:rolleyes:

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I've told this story before on HPC.

When I first moved to london (July 1998), my rent was £115 a week for a 1 bed roomed flat in Hackney. Housing benefit then was £110 a week, and I would have to make up the extra £5 a week from my JSA, which I would take in person (as the HB was paid direct to the landlord then) and pay in cash and get a stamp on a rent book.

This was how the flat was advertised, along with the payment arrangements in the Pink newspaper at the time, specifically targetted at gay unemployed people looking to move to London.

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I've told this story before on HPC.

When I first moved to london (July 1998), my rent was £115 a week for a 1 bed roomed flat in Hackney. Housing benefit then was £110 a week, and I would have to make up the extra £5 a week from my JSA, which I would take in person (as the HB was paid direct to the landlord then) and pay in cash and get a stamp on a rent book.

This was how the flat was advertised, along with the payment arrangements in the Pink newspaper at the time, specifically targetted at gay unemployed people looking to move to London.

The problem with that is that £5 from £67 a week can be a lot of money to some ppl - it can mean someone not eating or having the heating on. Rents HAVE to fall, but whatever the level of HB is set to, I suspect that the unemployed will have to subsidise the difference in rent out of their benefit.

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The problem with that is that £5 from £67 a week can be a lot of money to some ppl - it can mean someone not eating or having the heating on. Rents HAVE to fall, but whatever the level of HB is set to, I suspect that the unemployed will have to subsidise the difference in rent out of their benefit.

Sorry, you are against reductions in HB?

They push up not only rents in general, but also HPs, via yield.

We had a long thread about that before the election: http://www.housepricecrash.co.uk/forum/index.php?showtopic=143597&view=findpost&p=2535945

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Our 'Socialist' friends should have spent the last 13 years building a shed load of council housing to replace those that they are continually bemoning were sold off by a certain previous PM.

At least then the councils might be the ones making the money rather that private LL's with rents getting pushed up for the rest of us as a concequence.

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Sorry, you are against reductions in HB?

They push up not only rents in general, but also HPs, via yield.

We had a long thread about that before the election: http://www.housepricecrash.co.uk/forum/index.php?showtopic=143597&view=findpost&p=2535945

No I'm not against drops in HB.

However there will be a difference between what people get via HB, and what an "average" rent is, as BomberBrown described. Say, an average price of a privately rented flat could drop to £80 a week (in London), but HB will only give £70 a week, thus the person on benefit has to find the shortfall out of their own pocket...That £10 a week is a lot of money to ppl on JSA..

I know you have to encourage those to go out to work, by making life uncomfortable for those on benefits, but if there's no jobs to go to..

For instance....

From April 2013, Housing Benefit awards will be reduced to 90 per centre of the initial award after twelve months for claimants receiving Jobseeker's Allowance;

http://www.lawcentreni.org/news/recent-news/1-news/676-benefits-and-the-budget.html

Will we be hitting 3m unemployed by then?

Edited by Dave Beans

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Our 'Socialist' friends should have spent the last 13 years building a shed load of council housing to replace those that they are continually bemoning were sold off by a certain previous PM.

At least then the councils might be the ones making the money rather that private LL's with rents getting pushed up for the rest of us as a concequence.

Exactly.

Or just relaxed a little planning policy, and allowed individuals and the private sector build their own homes. Why this crazy rationing of plots?! (Particularly here in the south.) Bonkers! Stupid! (See my sig.)

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Friend of mine's sister had twins, useless boyfriend buggered off. She got a 2/3 bed ex-council house from the local housing authority for a mere £1,500 a month. Meanwhile me and the missus were paying £800 for 3/4 bedroom houses in the leafiest, most desireable postcodes in town.

On the other hand, and this has been going on for years, if the claimant finds somewhere cheaper than the going rate guess who gets the difference? The claimant - they actually get cash back. Brilliant eh?!

Edited by surfgatinho

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No I'm not against drops in HB.

However there will be a difference between what people get via HB, and what an "average" rent is, as BomberBrown described. Say, an average price of a privately rented flat could drop to £80 a week (in London), but HB will only give £70 a week, thus the person on benefit has to find the shortfall out of their own pocket...That £10 a week is a lot of money to ppl on JSA..

I know you have to encourage those to go out to work, by making life uncomfortable for those on benefits, but if there's no jobs to go to..

For instance....

http://www.lawcentreni.org/news/recent-news/1-news/676-benefits-and-the-budget.html

Will we be hitting 3m unemployed by then?

I know it will be hard, but landlords will not be able to find money that doesn't exist. Including from private tenants in a recession. Rents will go down, or landlords will have empty properties.

Landlords have always charged as much as they could possibly charge. (Like any person, in any market, actually.) And they will keep trying. The difference is that the market will come steady down as HB are gradually cut.

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I know it will be hard, but landlords will not be able to find money that doesn't exist. Including from private tenants in a recession. Rents will go down, or landlords will have empty properties.

Landlords have always charged as much as they could possibly charge. (Like any person, in any market, actually.) And they will keep trying. The difference is that the market will come steady down as HB are gradually cut.

Prices have to drop, hopefully really hitting those BTL speculators who have relied on HB to prop up their empires, but my fear is that those most vulnerable will end up paying the price....Its very difficult...

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Prices have to drop, hopefully really hitting those BTL speculators who have relied on HB to prop up their empires, but my fear is that those most vulnerable will end up paying the price....Its very difficult...

Some benefits recipients may have to move to cheaper accommodation. Sad but fair. As the report said, many live in places that working adults could not afford. This is unsustainable. A rebalancing is necessary.

Actually a lot of "re-balancing" will happen in the next years, all painful, in all areas, in the whole country! The whole economic system was distorted, and via borrowing we were living beyond our means as a nation.

Rebalancings. Loads of it.

.

Edited by Tired of Waiting

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The problem with that is that £5 from £67 a week can be a lot of money to some ppl - it can mean someone not eating or having the heating on. Rents HAVE to fall, but whatever the level of HB is set to, I suspect that the unemployed will have to subsidise the difference in rent out of their benefit.

Indeed!! And didn't I know it at the time.

The real point of my anecdote was to reflect the fact that the figure for HB 12 years ago, wasn't determined by the current rents at the time and landlords couldn't be greedy at the expense of the Tax Payer. Unlike now, where LHA for the same flat has almost doubled since 1998 and always covers the rent and tenants are no longer having to top up their HB with their JSA.

So, if I had to top up my HB then, why can't those in receipt of LHA do the same? I think I know which direction rents would head if this soon became the case. My final point being that the extra £5 (on top of the HB) was the absolute max the landlords could command before the landlord got no rent at all or suffered huge voids.

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  • 152 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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