Dozen London Councils Planning To Ship Lha Tenants To Other Areas

[Dorkins]

tough, if you do not earn enough go away. I also can not afford zone 1 so I ethnically cleansed my self to zone 6 (already Essex) and I spend my taxed income on the Oyester. welcome in the real world

I don't think you understand, when people who support themselves have to move for financial reasons this is okay, when people dependent on the state have to move for financial reasons this is pure evil.

I hope this clears things up for you.

[Democorruptcy]

Mmm, yes, they're all unemployed immigrants living in the most expensive parts of London. 40% of HB goes to working Londoners whose pay doesn't cover their extortionate rents in some of the poorest boroughs, eg Newham. The hallowed Olympics promised to change their lives and indeed it has. No more jobs and higher rent. But it's their fault, right?

HB doesn't go to renters it goes to landlords.

http://mgov.newham.gov.uk/mgDeclarationSubmission.aspx?UID=193&HID=1807&FID=0&HPID=9998232

http://www.dailymail.co.uk/news/article-2023416/It-beggars-belief-Multi-millionaire-owns-massive-property-empire-chain-restaurants-lives-135-week-COUNCIL-HOUSE.html

[Imminent_plunge]

But that is the point, the government has done nothing to cut rents and still encourages BTL investments; how many MPs have BTL properties? And 40% of HB goes to Landlords who charge as much as they can, because they can.

The Olympics will not benefit the local economy just as moving the BBC has not created many jobs in Salford (maybe a few cleaning jobs). The BBC employees now commute from London.

I don't think rent controls would work. The only solution is to change the supply/demand balance but would building more houses achieve this? We still have open EU Borders. I do think that the Olympic Effect will be very short-lived in the East End and problems with transport, security etc will leave many Londoners questioning their sanity for living there. Time will tell. I'm predicting falls and voids in October/November as a result of a major change in sentiment from Londoners and desperation from landlords. If this is the case, the Olympics has been worth every single penny.

[CrashConnoisseur]

speye comment on the matter

http://speye.wordpre...ews-for-shapps/

Contains some good analysis...

'Exporting homelessness – very very bad news for Shapps':

http://speye.wordpress.com/2012/04/26/exporting-homelessness-very-very-bad-news-for-shapps/

The Newham Plan holds some cost and operational detail of the exporting homeless proposal. Newham plan to pay a private landlord in Stoke 90% of the (LHA) benefit level and an additional £60pw on top of this. This comes to £142pw / £615pcm for a 2 bedroom property in Stoke and this is considerably less than Newham pay to accommodate these homeless cases in Newham. So this is a cost saving to the benefit bill appears the economic rationale. However what impact will that have in Stoke or wherever else homeless cases are shipped out to?

Imagine you a private landlord in Stoke where a 2 bed property attracts a market rent of £400 pcm. Get rid of your existing tenant in Stoke, which is easily done in the unregulated private rented market, and replace your £400pcm income with a monthly income of £615. Such a 54% increase in income is a no-brainer and private landlords will be queuing up to accommodate London’s homeless families.

However, it means for every one of London’s homeless families imported into the PRS in Stoke creates one homeless case in Stoke.

This has many consequences or impacts:-

• It creates duties and costs upon Stoke to deal with the new found homeless case in Stoke.

• It creates increasing demand in Stoke for housing which sees the market rent level increase which always happens when supply remains the same and demand increases.

• The 8,000 or so HB claimants living in the private rented sector in Stoke face higher rent levels and increases the HB cost there.

• All other tenants living in private rented accommodation in Stoke, those who are working for example, are also hit with higher rent costs. This is likely to create even more homelessness in the local population as housing costs become more and more unaffordable (107% of new HB claimants are in work), arrears build up, and working in Stoke becomes less worthwhile as people are better off out of work.

[Imminent_plunge]

Not necessarily rent controls, double or treble council tax on second properties (esp those that are empty) would encourage many to release stock into the market. Remove incentives and heavily tax unearned BTL income. BTL LLs can outbid FTB because they get tax relief on the mortgage interest and can claim tax for depreciation etc. If the government took a view that houses were for living in and not investment then they could draft policy to make it happen. The fundamental problem is that MPs are heavily into property - not just the Tories look at Blair's property portfolio.

I agree with everything you've just said, which is exactly why none of the above will ever become policy. Too many MPs with their snouts in the trough. Surely you don't think we live in a democracy where people's points of view count? If we can raise a few million, we may be given a seat at Cameron's table. No guarantees though.

[Imminent_plunge]

Contains some good analysis...

'Exporting homelessness – very very bad news for Shapps':

http://speye.wordpress.com/2012/04/26/exporting-homelessness-very-very-bad-news-for-shapps/

I don't doubt any of this but being ******** here, I question the 107%. Surely it's 100% maximum, meaning all new HB claimants were working but I got a 'D' in maths, so maybe I'm misunderstanding percentages. Can anyone enlighten me? Sorry, I'm not meaning to sound adversarial, just trying to get my head around it.

[Blod]

The biggest effect of these caps is totally overlooked by the MSM, and that is that the might just slow the rent rises for those living in London.

I'd like to know what the percentage of London BTL are "mortgaged" and those that are owned outright. If it is a I suspect that most are liable to the effects of rising borrowing costs then there is a likelihood that we could have a rather big problem when rates move up. This is the real problem that should be tackled however high housing costs are always spun as some how a good thing. :angry:

[CrashConnoisseur]

I don't doubt any of this but being ******** here, I question the 107%. Surely it's 100% maximum, meaning all new HB claimants were working but I got a 'D' in maths, so maybe I'm misunderstanding percentages. Can anyone enlighten me?

It's a net percentage based on the number of new claims. What it means is that many unemployed claimants are moving into low-paid work, but still need to claim HB. So the total number of HB claimants (both new and pre-existing) who are working is rising slightly faster than the number of new claims. For example, if there were 100,000 new claimants of which half (50,000) were working and 57,000 pre-exisiting claimants moved into work then the net result would be an additional 107,000 HB claimants who are working which would be 107% of the 100,000 new claims. These figures are for illustration purposes; I don't have the actual figures to hand.

[CrashConnoisseur]

The biggest effect of these caps is totally overlooked by the MSM, and that is that the might just slow the rent rises for those living in London.

On the evidence so far, the biggest effect is likely to be in making people homeless. There are several misguided and uninformed posters on this forum who seem to think that the rental market is dominated by Housing Benefit. It isn't. In London, for example, 82% of rental payments (approx. £7 billion out of £8.5 billion in 2008/9) are paid from other sources of income.

Source: 'The effects of housing benefit changes on London' [March 2011]:

http://www2.lse.ac.u...lity/Fenton.pdf

Edited May 2, 2012 by CrashConnoisseur

[curious1]

On the evidence so far, the biggest effect is likely to be in making people homeless. There are several misguided and uninformed posters on this forum who seem to think that the rental market is dominated by Housing Benefit. It isn't. In London, for example, 82% of rental payments (approx. £7 billion out of £8.5 billion in 2008/9) are paid from other sources of income.

Source: 'The effects of housing benefit changes on London' [March 2011]:

http://www2.lse.ac.u...lity/Fenton.pdf

Do you have a graph for that which compares the lower end of the private rental market with the HB sector? Given the number of £million+ properties in London that will be let at high levels one might assume the private rental figure is skewed higher by all the expensive properties let out... which renders the comparison irrelevant as no-one renting that feels the effect of the housing benefit floor will be renting particularly expensive properties will they not?

It would be really great if we could get the data to make a judgement on the effect of HB on rentals and property prices so we can put the argument to bed either way. I for one do not want to be spouting prolific on the ills of HB on the general rental market if it turns out I'm talking sh1te!

/edit

ie a chart of price distribution of private rentals in london would help

Edited May 2, 2012 by curious1

[curious1]

##crap maths warning##

For example, and forgive me for reducing the argument to an ill thought out approach and a bad source for my numbers. It's just to give you an idea of my reasoning. Not to boulster any argument either way... I'll leave it to better statisticians on this site to crunch the numbers.

In N1, there are 504 rentals available for 2 beds over £2000pm and only 56 under £2000pm.

So out of a stock of 550 houses available for a typical family on some obsurdly inflated housing benefit rate, the housing benefit only arguably effects about 10% of the total market, so looking at the graph, surely the value of private rentals that are affected are roughly the same in number or value as the number of HB rentals, indicating a much greater potential for distortion of the market?

// ducks and covers from the inevitable shoot-down! //

[Blod]

It is those that are working and renting that would benefit most if this is allowed to run its course. Newham chose Stoke simply to maximize the impact. I would bet that there are plenty of places in the suburbs that could house these families or were they trying to move one chosen "social" group?

Is it moral to force one social group (the employed not in receipt of HB) out of London whilst at the same time ensuring that another can group (those on HB) to stay?

Edited May 2, 2012 by Blod

[winkie]

It is those that are working and renting that would benefit most if this is allowed to run its course. Newham chose Stoke simply to maximize the impact. I would bet that there are plenty of places in the suburbs that could house these families or were they trying to move one chosen "social" group?

Is it moral to force one social group (the employed not in receipt of HB) out of London whilst at the same time ensuring that another can group (those on HB) to stay?

Personally I don't agree with forcing people to move so far away from home, it is wrong....the rents have to come down for all so that working Londoners can pay their own way.

[Blod]

Personally I don't agree with forcing people to move so far away from home, it is wrong....the rents have to come down for all so that working Londoners can pay their own way.

And to achieve this a few families may have to move. I don't think that they'd need to move as far as Stoke though.

[winkie]

And to achieve this a few families may have to move. I don't think that they'd need to move as far as Stoke though.

So be it....no further away than say Harlow, more job opportunities there so I have been told.

[frederico]

this is just a result of the readjustment required to sort out this financial mess, it is only the start mind.

This whole 'crisis' is becoming so predictable.

We all know what happens at the end.

[Blod]

Personally I don't agree with forcing people to move so far away from home, it is wrong....the rents have to come down for all so that working Londoners can pay their own way.

And to achieve this a few families may have to move. I don't think that they'd need to move as far as Stoke though.

[Imminent_plunge]

And to achieve this a few families may have to move. I don't think that they'd need to move as far as Stoke though.

My take is that rents have been hiked because of the hallowed Olympic effect. Other councils will not take on what they see quite rightly as 'London's problem.' however, many will move voluntarily over the next few months as they won't be able to find accommodation within the local housing allowance. After the Olympics, rents will drop like a stone. No drip, drip, drip, more like a massive THUD. We will see this in October and November.

[South Lorne]

http://www.lettingagenttoday.co.uk/news_features/Dozen-London-councils-planning-to-ship-LHA-tenants-to-other-areas

...huh... Dromney and Jowell ...should realise even people earning wages / salary outside London have not been able to live in their home towns for years due to city / union types buying up second homes there....these lefty London councils due to their own reckless policies are trying to pass problems on to other people ...and Labour are responsible for the high prices in the first place....the councils should raise the money and house their own people ...sack the present council ...all taking money without providing local solutions...

[Democorruptcy]

On the evidence so far, the biggest effect is likely to be in making people homeless. There are several misguided and uninformed posters on this forum who seem to think that the rental market is dominated by Housing Benefit. It isn't. In London, for example, 82% of rental payments (approx. £7 billion out of £8.5 billion in 2008/9) are paid from other sources of income.

Do you think rents would be so high without £22bn housing benefit?

[porca misèria]

Source: 'The effects of housing benefit changes on London' [March 2011]:

http://www2.lse.ac.u...lity/Fenton.pdf

Just on a ballpark, your graph shows something between £5bn and £6bn housing benefit over all regions. That is to say, in the ballpark of one quarter of the £21/22bn widely cited (which is also broadly consistent with IDS telling us he represents 40% of the market).

I infer that it's not quite all it might appear. A spun story.

[Daveky]

Who wants these useless benefits lepers? I know let's send them to stoke as its the only place where they might improve the gene pool.

[richc]

On the evidence so far, the biggest effect is likely to be in making people homeless. There are several misguided and uninformed posters on this forum who seem to think that the rental market is dominated by Housing Benefit. It isn't. In London, for example, 82% of rental payments (approx. £7 billion out of £8.5 billion in 2008/9) are paid from other sources of income.

Source: 'The effects of housing benefit changes on London' [March 2011]:

http://www2.lse.ac.u...lity/Fenton.pdf

This chart is ridiculously dishonest and misleading (which is completely obvious to anyone who isn't a Labour Party shill). About 1/3 of the households in London in privately rented accommodation receive housing benefit. That's the number that matters and the number that is driving up rents across the board. The numbers for total spending are thrown off by a small number of people renting mansions at the high end, which is more or less irrelevant to the issue. Notice that nationally, and even in London, rents are now falling, right after the cap on HB came into full effect.

[South Lorne]

Who wants these useless benefits lepers? I know let's send them to stoke as its the only place where they might improve the gene pool.

...you are from Stoke..?...

[CrashConnoisseur]

Do you have a graph for that which compares the lower end of the private rental market with the HB sector?

I've not seen one. You might like to email Alex Fenton at Cambridge University who produced the above graph (aff28 AT cam.ac.uk) and ask if the required data is available.

Given the number of £million+ properties in London that will be let at high levels one might assume the private rental figure is skewed higher by all the expensive properties let out... which renders the comparison irrelevant as no-one renting that feels the effect of the housing benefit floor will be renting particularly expensive properties will they not?

That's a reasonable assumption. It's what I've been saying since these ill-considered cuts were announced: they will have little if any effect on the mainstream rental market. Any impact will be at the bottom end of the market particularly in areas where there is a large concentration of HB claimants. Here their effect is likely to push rents up. I say that for three reasons:

1. When LHA was introduced in April 2008 a key principle was that claimants could keep up to £15 a week of any saving if they were able to find or negotiate a rent below the LHA rate (so called Excess Payments). The coalition govenment scrapped that. Now there is no incentive for HB claimants to look for or negotiate sub-LHA rents and there's little incentive for landlords to offer them. Even the government's own Social Security Advisory Committee consider it "likely that landlords will respond by simply raising their contractual rents to the level of the LHA rate."

2. You can't fit a quart into a pint pot. More HB claimants chasing a reduced pool of affordable properties means landlords gain pricing power over tenants. An undeniable effect of the cuts is to reduce the number of landlords willing to rent to HB claimants just when demand is rising due to the recession and the effects of Right-To-Buy. Again the government's Social Security Advisory Committee consider that this "may have the effect of pushing up rents."

3. The main 'competition' for sub-LHA rentals isn't from more expensive private sector properties, it's from the social rental sector (Council and Housing Associations). For such social tenancies it's long-standing government policy to raise rents by RPI + 0.5% + £2 (this is one of the main reasons why the HB bill has risen over recent years as RPI has risen) [*]. The majority of HB claimants are in the social sector.

'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-...80108509551.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.

* 'Rent Setting for Social Housing Tenants':

http://www.parliamen...ers/SN01090.pdf

The Coalition Government is continuing with the rent setting process put in place by the previous government with a revised target convergence date of 2015/16, subject to a maximum annual rent rise for an individual tenant of the retail prices index + 0.5% + £2 per week.

It would be really great if we could get the data to make a judgement on the effect of HB on rentals and property prices so we can put the argument to bed either way.

Even if the data was available that seems unlikely. There are far too many people on this forum who have no respect for facts, research, or substantive evidence, preferring instead to base their opinions on prejudice, myth, and misinformation.

Edited May 2, 2012 by CrashConnoisseur