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Kensington And Chelsea Council Statement On Housing Benefit


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It still distorts the market.

Look at it this way. You are a grocer with 10 cans of soup. 8 benefit customers have money to buy the soup given to them by the government. The amount they have is the average paid for by private customers. So, along come 5 private customers who would like to buy the last 2 cans of soup. Guess what happens to the price of those 2 cans... what is the outcome of this on the cost of the 8 cans of soup for the benefit customers?

Just because they exclude something from their calculations, it doesn't mean that it doesn't have an effect.

Exactly.

"LHA rates are therefore set by what non-HB claimants agree to pay for rent."

Or more correctly what non-HB claimants have to agree to pay for rent when in competition with HB recipients for the same living space.

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(...) When collecting such data Rent Officers are directed by law to “assume that no-one who would have been entitled to housing benefit had sought or is seeking the tenancy”. LHA rates are therefore set by what non-HB claimants agree to pay for rent.

BTW, I've been ignoring this other distortion, just trying to keep the thread on the topic of bias with LHA data collection.

But I was puzzled by why you would want to bring this up.

I think you think that HB does not affect the "non-HB claimants" rents. Is that it?

Of course it does. IDS said his dept pays for 40% of the total private rental market. this does boost the demand side of the market, and since planning blocks new buildings, rents go up.

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HB and LHA were already set at 50th percentile of market rents until this year, since April they have now gone down to 30th percentile. This means that 70 percent of privately rented properties in any area will already charge more than is available to any Housing Benefit claimant. Most properties are already out of reach of the average Housing Benefit claimant.

I thought they'd delayed the change? (or made it only apply to new claimants)

Anyway, about time. In the end, we will all benefit from cheaper rents and a housing crisis might actually make the governments think about building some social housing and NOT SELLING IT OFF FFS!

Most properties are already out of reach of the average Housing Benefit claimant.

What was the corollary of that?

Most properties were out of reach of the average private tenant.

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If you look at the data which can be obtained from the LA it concerns properties which they let at market price (outside the usual council housing channels, therefore acting as a commercial landlord)

So higher rents than Council properties. OK...

and unsuccessful Housing Benefit claims (not actual live claims).

Sorry, what does that mean?

That is why I commented on the list of data sources below the link. Local Authorities do not provide lists of rents to the VOA from their HB caseload.

I see. So they only provide info to the VOA about the private rental market then, is that it?

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Can I have a guess as to whether these forms are cross checked with Inland Revenue?

I guess NO.

Can someone confirm or deny my guess?

But we could send a letter to the HMRC with this suggestion, and then publish lots of copies of this letter in landlords message boards. :D

B)

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<br /><br /><br />

Can you anwer me this? Since LHA is paid directly to the recipient and not to the landlord (except in exceptional circumstances), how the hell can a landlord know if a tenant is in receipt of LHA or not for the purpose of that form?

That form is just for the public. Before any data can be used it would need to be confirmed and checked against the HB database.

'Rent Officer Handbook - Lettings Information : Recording on Victer':

http://www.voa.gov.uk/corporate/publications/Manuals/RentOfficerA-Z/l-roh-lettings-information-recording-on-victer.html#P75_812

Recording information: VIS good practice

When creating a new record on VIS always use the PAF validation facility, this will ensure the address is as accurate as possible

When creating a record, always view the possible duplicate records, this will cross check against the Housing Benefit database and ensure that the record is not affected by Housing Benefit.

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TBH and afaics it doesn't make much difference whether they do the job fairly and correctly or not, it will still distort the market. Even if they exclude HB rentals, the shortage of private rentals will have a inflationary effect.

Yes, I agree, of course. it's all a matter of degrees. 30th percentile down from 50th percentile has reduced LHA in my area by around 5%. I guess that bias collecting the data could be more relevant than this - if the VOA is just asking landlords and agents about it.

Excluding the obvious solution (more social housing, HB only available for SH), I would suggest the following:

  • Include HB rentals in establishing local rents

  • Set HB at <50%

AFAICS this will mean that, as the proportion of HB in a given area goes up, rents will go down for HB. At some point this will then push landlords into renting more to private tenants, which will have an upward pressure on HB allowances. In other words, with the right level of HB as a percentage of average rents, an equilibrium will be reached.

Bottom line is that as soon as a LL can get more money from HB than they could get renting the same property to a private tenants, then you know the system is screwed...

Yes, that would be a faster way. But you would have even more political resistance. I think IDS' future "universal benefits" will change the whole system. I / we should try to learn about that. (But let's leave this for another day / another thread. I'm too tired of this today. It is all so depressing. )

Edited by Tired of Waiting
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"Dear Letting Agent, Please fill in this form telling us what the current market rents are. We will use this info to calculate how much to pay you in the future."

There should be a game theory team next door to the team of lawyers, that all policies have to be approved by.

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That form is just for the public. Before any data can be used it would need to be confirmed and checked against the HB database.

'Rent Officer Handbook - Lettings Information : Recording on Victer':

http://www.voa.gov.uk/corporate/publications/Manuals/RentOfficerA-Z/l-roh-lettings-information-recording-on-victer.html#P75_812

ensure that the record is not affected by Housing Benefit.

That is the only thing that worries you?

1st) Why? I mean, why does that matter at all???

2nd) Aren't you worried that the VOA collects "data" from forms filled up by landlords and letting agents ???

Can't you see the vested interest here?!

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HB and LHA were already set at 50th percentile of market rents until this year, since April they have now gone down to 30th percentile. This means that 70 percent of privately rented properties in any area will already charge more than is available to any Housing Benefit claimant. Most properties are already out of reach of the average Housing Benefit claimant.

Indeed; even before the cuts almost half of LHA claimants had to make up a shortfall in their rent.

'House of Commons Written Answers 10 November 2010':

http://services.parliament.uk/hansard/Commons/ByDate/20101110/writtenanswers/part012.html

Steve Webb: In August 2009, 48% of those receiving housing benefit under the local housing allowance arrangements had a shortfall in their rent caused by the customer's contractual rent being higher than the appropriate local housing allowance rate.
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HB and LHA were already set at 50th percentile of market rents until this year, since April they have now gone down to 30th percentile. This means that 70 percent of privately rented properties in any area will already charge more than is available to any Housing Benefit claimant. Most properties are already out of reach of the average Housing Benefit claimant.

Only if all the landlords and all the letting agents filling up that form "for" :rolleyes: the VOA were 100% honest and unbiased! :rolleyes::rolleyes::rolleyes:

.

Edited by Tired of Waiting
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Notice that 'housing benefit is out of control' but no one is suggesting that 'rents are out of control'.

It would be much more helpful if both were reformed. Making some people on benefit homeless still doesn't change the situation at all for the working family they seem to have some sympathy with.

Some notable differences with Holland, where things seem to work much better than here. Cities have areas of social housing, controlled rent areas and a free-for-all sector for private landlords. The zoning mixes the three to avoid ghettos.

There is usually a residence qualification to qualify for the controlled rent sector. I think it varies from town to town. When I moved to Groningen for a job, I had to rent in the private sector for 6 months before being able to apply for a housing association place in the controlled sector.

Private rents were what I considered 'out of control' at the time . . . seven years ago . . . but no one on benefits lives in the private sector. I was paying 800 Euro a month for my first house. When I qualified and moved to the controlled sector, the rent was 360 Euro a month . . . actually for a nicer house in the same area. Private landlords were coining it, but they weren't given the whole accommodation market to extort.

All round it seems a pretty fair system.

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So higher rents than Council properties. OK...

Sorry, what does that mean?

I see. So they only provide info to the VOA about the private rental market then, is that it?

LA's are not paid to gather information about the private rented sector so they don't do it for anyone. The VOA is paid to gather this information and have an extensive network of Rent Officers throughout the country who spend all day doing that.

As has been pointed out the Rent Officers are prohibited from using data about rents for which the claimant is currently receiving Housing Benefit.

There are two small provisos that in some circumstances the LA can be a source of data. These are quite clearly described in the VOA guidance.

They are:

1. Rents where the LA acts as a commercial landlord (very rare in my experience)

2. Data can be provided by the LA about rents in HB cases where the claim was unsuccesful ( in other words a person makes a claim but fails to qualify for one reason or another).

As there is currently no active reporting mechanism to ensure that no. 2 actually is a source of data, you can safely assume that no L.A. is the source of any information about rents to the VOA.

As pointed out above that is not to imply there is no effect from Housing Benefit in the current rental market, just that L.A.'s cannot seek to influence the decisions which the VOA makes by providing manipulated data.

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Notice that 'housing benefit is out of control' but no one is suggesting that 'rents are out of control'.

It would be much more helpful if both were reformed. Making some people on benefit homeless still doesn't change the situation at all for the working family they seem to have some sympathy with.

Some notable differences with Holland, where things seem to work much better than here. Cities have areas of social housing, controlled rent areas and a free-for-all sector for private landlords. The zoning mixes the three to avoid ghettos.

There is usually a residence qualification to qualify for the controlled rent sector. I think it varies from town to town. When I moved to Groningen for a job, I had to rent in the private sector for 6 months before being able to apply for a housing association place in the controlled sector.

Private rents were what I considered 'out of control' at the time . . . seven years ago . . . but no one on benefits lives in the private sector. I was paying 800 Euro a month for my first house. When I qualified and moved to the controlled sector, the rent was 360 Euro a month . . . actually for a nicer house in the same area. Private landlords were coining it, but they weren't given the whole accommodation market to extort.

All round it seems a pretty fair system.

Gosh, another example of governments interfering with markets, giving one section of the community huge subsidies, and squeezing supply in those excluded from that such that they have to pay exorbitent rents to make things balance.

I wonder if you could devise a more unfair system?

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Does anyone have a list of the number of HB per area, and the amount of CT charges per band, i'll bet that kensington and chelsea have the lowest HB claims and one of the lowest council taxes. They are trying to move the poor into other areas pushing up the cost of council tax.

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HB and LHA were already set at 50th percentile of market rents until this year, since April they have now gone down to 30th percentile. This means that 70 percent of privately rented properties in any area will already charge more than is available to any Housing Benefit claimant. Most properties are already out of reach of the average Housing Benefit claimant.

The mode rental price in K&C is 650 pw mean bit higher, so HB rents in that area dont push up the rental rates.

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"Spending on housing benefit has risen from £14 billion ten years ago to £21 billion today. That is close to a 50 per cent increase over and above inflation"

Sounds like 50% including inflation. Some calculation gone wrong methinks.

Take into account everyting double in price over a 10 year period those numbers arn't too bad.

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LA's are not paid to gather information about the private rented sector so they don't do it for anyone. The VOA is paid to gather this information and have an extensive network of Rent Officers throughout the country who spend all day doing that.

(...)

As pointed out above that is not to imply there is no effect from Housing Benefit in the current rental market, just that L.A.'s cannot seek to influence the decisions which the VOA makes by providing manipulated data.

OK, I'll believe you ( you sound reliable ;) )

So the main source of info for these VOA officers are landlords and letting agencies. Still a tad worrying, no??

And the VOA has "an extensive network of Rent Officers throughout the country"? I thought they were London based. Are they based "in the provinces"? Are they locals themselves? Or living there? Going native?

'cause, if you pardon my french, LHAs are a fecking loadsamoney.

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Some notable differences with Holland, where things seem to work much better than here. Cities have areas of social housing, controlled rent areas and a free-for-all sector for private landlords. The zoning mixes the three to avoid ghettos.

There is usually a residence qualification to qualify for the controlled rent sector. I think it varies from town to town. When I moved to Groningen for a job, I had to rent in the private sector for 6 months before being able to apply for a housing association place in the controlled sector.

On the same basis I suppose Aberdeen is in England?

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Does anyone have a list of the number of HB per area, and the amount of CT charges per band, i'll bet that kensington and chelsea have the lowest HB claims and one of the lowest council taxes. They are trying to move the poor into other areas pushing up the cost of council tax.

Even if they were "trying to move the poor into other areas" why do you think that would affect Council Tax?

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Gosh, another example of governments interfering with markets, giving one section of the community huge subsidies, and squeezing supply in those excluded from that such that they have to pay exorbitent rents to make things balance.

I wonder if you could devise a more unfair system?

The controlled sector isn't subsidised. It is run by private housing associations. The disparity in rent is usually because the private sector is short term lets and furnished property. In the controlled sector, you usually move into a completely empty house with no kitchen, carpets, zilch. These are obviously long-term lets where you make some investment in moving.

You are able to buy your controlled rent house if you want. But in practice few people do as security of tenure is good.

Only the social sector is subsidised.

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The controlled sector isn't subsidised. It is run by private housing associations. The disparity in rent is usually because the private sector is short term lets and furnished property. In the controlled sector, you usually move into a completely empty house with no kitchen, carpets, zilch. These are obviously long-term lets where you make some investment in moving.

You are able to buy your controlled rent house if you want. But in practice few people do as security of tenure is good.

Only the social sector is subsidised.

Why would anyone want to rent in the private sector, given that the differential in rents was so high, unless they had to?

What criteria do they use for letting people rent in the 'social sector'.

And if my understanding of markets and economics is anything, when you 'control' the price of something, you get too much supply or too much demand unless they happen to magically hit the market price, which no one, not even the Dutch, can ever do. So in that 'controlled sector', how is housing allocated? What restrictions are there in accessing it? Is it like the UK where you can have a 3/4 million pound apartment for £60 a week if you are Frank Dobson (or whatever his pitifully low rent was), or is there some income restriction upon it?

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