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VacantPossession

Housing Benefit Pushes Up House Prices

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Let me declare first that I fully support the concept of housing benefit. Also happy to pay local tax to support genuine need.

Now that's out of the way, my local authority, and many others, present little challenge to landlords who exploit the housing benefit regime by suggesting a "market price". Most local authorities capitulate to this with very little questioning, and I have evidence that there are no proper checks as to true market value for rental properties.

Example: two years ago I vacated an apartment on which I got the rent down to £750 from £850 due to rents reflecting the buying market. The moment I left and moved somewhere else, the landlord found he could not match even my reduced rent so, after several years refusing benefit clients, he turned tables, offered the flat for £875 and got that sum straightaway from the local authority. I know this because I checked with the new tenants. Since then I know of many similar flats where the same thing happens.

Further research suggests that local authorities are so keen to offload their own queues for housing on the private sector that they will do almost anything to save themselves the trouble. The result is that a significant proportion of social housing via private landlords ends up being between twenty and forty percent more expensive than it should be.

This in turn gives letting agents the ammunition to claim that rents are "rising". They are actually not rising if the market had proper influence. The fallout from this is that a large number of landlords are now attempting to value their properties on the basis of an entirely rigged rental market on the back of lazy councils who cannot be bothered to properly negotiate. Discuss.

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Let me declare first that I fully support the concept of housing benefit. Also happy to pay local tax to support genuine need.

Now that's out of the way, my local authority, and many others, present little challenge to landlords who exploit the housing benefit regime by suggesting a "market price". Most local authorities capitulate to this with very little questioning, and I have evidence that there are no proper checks as to true market value for rental properties.

Something is defiantly not right in Norwich the rents are nuts and there seems to be a floor under which they don't go under

Example: two years ago I vacated an apartment on which I got the rent down to £750 from £850 due to rents reflecting the buying market. The moment I left and moved somewhere else, the landlord found he could not match even my reduced rent so, after several years refusing benefit clients, he turned tables, offered the flat for £875 and got that sum straightaway from the local authority. I know this because I checked with the new tenants. Since then I know of many similar flats where the same thing happens.

Further research suggests that local authorities are so keen to offload their own queues for housing on the private sector that they will do almost anything to save themselves the trouble. The result is that a significant proportion of social housing via private landlords ends up being between twenty and forty percent more expensive than it should be.

This in turn gives letting agents the ammunition to claim that rents are "rising". They are actually not rising if the market had proper influence. The fallout from this is that a large number of landlords are now attempting to value their properties on the basis of an entirely rigged rental market on the back of lazy councils who cannot be bothered to properly negotiate. Discuss.

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Selling off the social housing stock may not have been the master stroke it appeared to be. The councils are legally obligated to house certain groups which means they are in a poor bargaining position if the local landlords realise this.

Edited by wonderpup

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Any government scheme ends up being gamed and defrauded. As you say, no need to fight for the best price if someone else is paying. Same is true of all social housing, unfairness, fraud, gaming wherever you look.

The only system I can think of that you can't game would be a citizens income, which is why we need it so badly. All social housing should be sold off to the highest bidder, let the market allocate housing.

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Housing benefit should be scrapped. I keep saying this. But I suppose now I have turnedd to the dark side and have a VI, sure print the damm money. Give people £1000 in benefit straight to the landlord/bankers. The monetary system can go to hell.

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They seem to pay more for some reason..

Last lot of neighbours near me rented privately.. £395 pm.

New lot (HB) paying £450.

Most amusingly it was only advertised on RM for £425 :blink:

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They seem to pay more for some reason..

Last lot of neighbours near me rented privately.. £395 pm.

New lot (HB) paying £450.

Most amusingly it was only advertised on RM for £425 :blink:

Tenants keep the difference?

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Selling off the social housing stock may not have been the master stroke it appeared to be. The councils are legally obligated to house certain groups which means they are in a poor bargaining position if the local landlords realise this.

Did it ever appear ti be a master stroke? Not to me it didn't.

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Did it ever appear ti be a master stroke? Not to me it didn't.

It was a disaster. They should all be sold off, but not to those renting them, but to the highest bidder. Social housing only for the few without the mental faculties to look after themselves.

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Used to be the case that the tenant could keep upto 15 quid difference. Thankfully the Tories scrapped that in the HB reforms.

Officially, that is.

Oh, and if it's any help, as an anecdotal I know of someone who was so happy to recently get a much cheaper council house as their HB was going to be cut below what their rent was and they couldn't cove the difference

Edited by daiking

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Inflation is up, the increase in inflation was due to an increase in the rents of council and social housing (these rents rise above RPI and have done for a decade now, if not longer).

My job (contract - can anyone get a secure job anymore?), finished about 2 week ago. Then the rent increased by 5 or so %.

State spending up. Work incentive DOWN.

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Used to be the case that the tenant could keep upto 15 quid difference. Thankfully the Tories scrapped that in the HB reforms.

Now tenants have no incentive to haggle on the rent. HB pays X, I'll pay X mentality, get me money's worth.

Landlords figure, X = minimum price.

Before, many people would ask for rent to be reduced by £15/week.

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Officially, that is.

Oh, and if it's any help, as an anecdotal I know of someone who was so happy to recently get a much cheaper council house as their HB was going to be cut below what their rent was and they couldn't cove the difference

Yes, council houses and HB, double benefit. Nice if you can get it. Council housing in some places is so lucrative, if you get it, you can sub let it and live off the income living elsewhere, free of the need to contribute to society.

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Yes, council houses and HB, double benefit. Nice if you can get it. Council housing in some places is so lucrative, if you get it, you can sub let it and live off the income living elsewhere, free of the need to contribute to society.

It's not a council council house but proper social housing instead of private rental. No scams as such but no jobs and need to live somewhere.

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Now tenants have no incentive to haggle on the rent. HB pays X, I'll pay X mentality, get me money's worth.

Landlords figure, X = minimum price.

Before, many people would ask for rent to be reduced by £15/week.

Exactly so. At least someone on HPC gets it.

Maybe my many posts attempting to correct the myths and misinformation about HB haven't all been in vain?

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Used to be the case that the tenant could keep upto 15 quid difference. Thankfully the Tories scrapped that in the HB reforms.

Why "thankfully"? Removing the incentive for long-term HB claimants to look for and negotiate lower rents is a barkingly daft idea. Even the government's own advisory committee can see that this 'cut' is likely to push up low-end rents...

'The Housing Benefit (Amendment) Regulations 2010 (S.I. No. 2010/2835). The Rent Officers (Housing Benefit Functions) Amendment Order 2010 (S.I. No. 2010/2836). Report by the Social Security Advisory Committee under Section 174(1) of the Social Security Administration Act 1992 and the statement by the Secretary of State for Work and Pensions in accordance with Section 174(2) of that Act '

http://www.official-documents.gov.uk/document/other/9780108509551/9780108509551.pdf

The Committee’s Report

[...snip...]

Removing the £15 excess payment from 2011

4.23 We have also previously reported on a proposal to remove the £15 excess payment and recommended that it be retained. In response to our report the previous administration decided to delay its removal for a year. We supported the retention of £15 excess when we reported last year because we believe that it supported tenant choice and responsibility. We still believe that this underpinning policy is correct and that if the excess is removed it is likely that landlords will respond by simply raising their contractual rents to the level of the LHA rate (this may be even more likely when considered in conjunction with the proposed upper limits for LHA).

[...snip...]

Setting LHA rates at the 30th percentile of rents in each BRMA from October 2011

4.24 The problems faced by those claiming HB who are trying to access housing in the PRS are well-documented. Landlords’ willingness to let to households claiming HB is limited in many areas, particularly since direct payment of the HB to the landlord was made exceptional under the LHA arrangements. Even with the LHA set currently at the median of the rents in each BRMA, not all properties are available to HB tenants and we are concerned that moving to a calculation based on the bottom 30% of rents, will mean more tenants chasing fewer ‘affordable’ tenancies and may have the effect of pushing up rents. We believe that this may have particularly damaging effect on the market for rooms in shared properties that are subject to the one bedroom shared accommodation rate for people aged under 25, an area of provision that is already under considerable pressure.

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We were out bid on a rental as we tried to negotiate a rent reduction, someone on benefits came in and offered the asking rent - no problem as they were not paying.

Prior to this April they would have been paying since they could have kept up to £15 per week of any reduction below the LHA rate. The real problem here is that relatively few landlords are willing to accept HB claimants so those that do often demand the full LHA rate on a take it or leave it basis. HB tenants are typically in no position to negotiate as there is no alternative accomodation available to them at the time.

Also they don't have a job to lose or clients to keep, so guaranteed payments for the LL.

Not really relevant where the rent would be covered by HB if the tenant lost their job anyway (or had savings to cover the rent). Many landlords acquire HB tenants by default as a result of job loss. Many HB claims are of short duration while the tenant is between jobs.

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Why "thankfully"? Removing the incentive for long-term HB claimants to look for and negotiate lower rents is a barkingly daft idea. Even the government's own advisory committee can see that this 'cut' is likely to push up low-end rents...

'The Housing Benefit (Amendment) Regulations 2010 (S.I. No. 2010/2835). The Rent Officers (Housing Benefit Functions) Amendment Order 2010 (S.I. No. 2010/2836). Report by the Social Security Advisory Committee under Section 174(1) of the Social Security Administration Act 1992 and the statement by the Secretary of State for Work and Pensions in accordance with Section 174(2) of that Act '

http://www.official-documents.gov.uk/document/other/9780108509551/9780108509551.pdf

whilst the top argument is sound market theorywhat is the market basis for the second assertation unless there is a physical universal law (maybe Hawking is aware of it) that houses spontaneously combust upon reducing yield, how does the demand increase without the supply decreasing, either someone moves into the vacated property freeing up a different property, it reduces rent or it seems this body believe it disappears into a rip in the fabric of space time, have they also written a report suggesting increasing it to 200 percentile could reduce the cost because it increases supply?

Edited by Tamara De Lempicka

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Exactly so. At least someone on HPC gets it.

Maybe my many posts attempting to correct the myths and misinformation about HB haven't all been in vain?

I already had that opinion ;)

The £15 incentive, was only for LHA claimants I believe, (private sector - local housing allowance, up to £15 if you could haggle it down to £15 below the local LHA rate).

If you ask me, they should scrap housing benefit entirely and pay the housing element direct to claimants, to do with as they please.

It would force rents down, as people could choose to sleep on sofas etc. and pocket the money, rather than it being forced into the housing market unto a landlord, or not be paid at all..

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Let me declare first that I fully support the concept of housing benefit. Also happy to pay local tax to support genuine need.

Now that's out of the way, my local authority, and many others, present little challenge to landlords who exploit the housing benefit regime by suggesting a "market price". Most local authorities capitulate to this with very little questioning, and I have evidence that there are no proper checks as to true market value for rental properties.

Example: two years ago I vacated an apartment on which I got the rent down to £750 from £850 due to rents reflecting the buying market. The moment I left and moved somewhere else, the landlord found he could not match even my reduced rent so, after several years refusing benefit clients, he turned tables, offered the flat for £875 and got that sum straightaway from the local authority. I know this because I checked with the new tenants. Since then I know of many similar flats where the same thing happens.

Further research suggests that local authorities are so keen to offload their own queues for housing on the private sector that they will do almost anything to save themselves the trouble. The result is that a significant proportion of social housing via private landlords ends up being between twenty and forty percent more expensive than it should be.

This in turn gives letting agents the ammunition to claim that rents are "rising". They are actually not rising if the market had proper influence. The fallout from this is that a large number of landlords are now attempting to value their properties on the basis of an entirely rigged rental market on the back of lazy councils who cannot be bothered to properly negotiate. Discuss.

I think you're talking about something different here: council's statutory duty to find housing for certain categories of people e.g. the unintentionally homeless. The vast majority of people claiming HB will have found their own accomodation. In any case, since April 2008 (earlier in some pathfinder areas) HB for the Private Rental Sector (PRS) is paid at a fixed rate based on the claimant's circumstances. This Local Housing Allowance (LHA) is determined by a Rent Officer who works for the local Valuation Office (HMRC) and is based on market rents which are not being covered by HB. So the council has no influence on the amount of LHA payable.

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I think you're talking about something different here: council's statutory duty to find housing for certain categories of people e.g. the unintentionally homeless. The vast majority of people claiming HB will have found their own accomodation. In any case, since April 2008 (earlier in some pathfinder areas) HB for the Private Rental Sector (PRS) is paid at a fixed rate based on the claimant's circumstances. This Local Housing Allowance (LHA) is determined by a Rent Officer who works for the local Valuation Office (HMRC) and is based on market rents which are not being covered by HB. So the council has no influence on the amount of LHA payable.

Connoisseur, can you give a link to show how rent officers determine the market rates?

I spoke to one rent officer a couple of years ago, and he told me they just ring local letting agents.

As an earlier poster said, government schemes are an invitation to fraud.

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The point is that as a worker and taxpayer we have to pay more to rent because people on benefits can outbid us and 'offer' the max LHA rate.

If they are capable of outbidding you, then you might be entitled to benefit yourself.

Or it may be the case that you do not wish to spend 60% of your income on renting a bedsit/flat/house. The benefit claimant is forced to spend that much. This discourages them from working as all their income would be then spent upon rent ph34r.gif

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  • 285 Brexit, House prices and Summer 2020

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      • down 5% +
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      • up 5%



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