Wednesday, April 8, 2009

Buy-to-let landlords ‘face repossession’ – nuff said :)

Buy-to-let landlords 'face repossession' over benefit changes

In April last year the Local Housing Allowance (LHA) was introduced, under which money for rent was paid to tenants, rather than being paid directly to private landlords. But the National Landlords Association said research had shown that many tenants were failing to pass on these payments to their landlords. [HPC spin: Tenants can now hold the threat of payment withdrawal over their landlords, forcing them to actually undertake repairs which they might otherwise neglect for extended periods of time.] As a result, 52pc of landlords surveyed said they would now not let or would be less likely to let a property to a tenant receiving LHA.

Posted by drewster @ 12:48 AM (1896 views)
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22 thoughts on “Buy-to-let landlords ‘face repossession’ – nuff said :)

  • Hmm. Whatever the sins of dodgy landlords who fail to make repairs in a timely way, this looks like a deadbeats charter to me. I have yet to meet any landlord willing to take a tenant on benefits and this will not help. I don’t envy unemployed renters trying to find rented accomodation and this seems to make their plight worse.

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  • QG I agree with you; I just can’t help putting a different spin on things when I see people like the National Landlords Association.

    The whole idea of Local Housing Allowance is typical of the market-led, choice-based ideals that this government espouses. It’s all fine and dandy in theory, because in theories all people are homo economicus. However in practice when you’re dealing with people who can’t even hold down a job, what are the chances they can stop themselves spending the rent on other things?

    On the plus side, LHA does reveal just how much people actually receive in benefits once you factor in rent costs. In most places, the housing allowance dwarfs the job-seekers allowance. For a single person aged 25 or over, living in a studio or 1-bedroom flat in central London, the LHA is £366.50 per week! (By contrast job-seekers allowance is just £64.30 a week.) That’s over £19,000 a year; so you’d need to be earning £25,000 before tax to cover rent alone. No wonder people become trapped on benefits.

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  • The LHA for a family with 4 children in central London is more than £100,000 (it increased by 300% over the past couple of years). It’s more than £30,000 where I live, an hour outside of London, with which you can rent quite a nice mansion. LHA is nothing but a scam to subsidize landlords at the expense of taxpayers. For the National Landlords Association to be complaining about it is absurdly greedy.

    LHA has nothing to do with “markets” — it’s the exact opposite. It sets an artificial floor under which market rents won’t fall, driving up costs for the majority of working families while putting benefits claimants in a trap of dependency. Forget about benefits claimants being lazy, you would have to be an idiot to get a job of the type that most people on benefits have open to them, if it meant sacrificing benefits worth the equivalent of a £150,000/year salary .

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  • it_is_going_with_a_bang says:

    Why in your right mind would you Let a property to someone who does not have a job. Therefore no means to pay themselves.
    This is itself an issue since at any stage their claim for benfits could be withheld. Leaving no source of funds.

    Paying large amounts of rental to jobless people with little money and some of them no money sense ( i do say some ! ) means that inevitably the landlord won’t get paid.

    Having said that. The whole issue of being a landlord is that you are running a business and a business with risk involved.
    Even with private rentals you are likely to get stuffed for rent occasionally.

    So stop bleating. If you don’t like it don’t rent it out. Find something else to do.

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  • @3 – Interesting post richc. I never realised LHA was quite as much as that. Maybe central London benefit claimants should be included in those tables of top earners alongside GP’s and judges?

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  • “4. it_is_going_with_a_bang said…
    So stop bleating. If you don’t like it don’t rent it out. Find something else to do.”

    Amen. Sick of working to subsidise the lazy and the greedy.

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  • If LHA is as high as some of the above comments suggest it goes to show how stupidly high property prices and rents became. If this benefit is really as ‘generous’ as some here are saying, which I doubt, it would be the only benefit that I know of that overshoots ‘need’ by that degree. @ number 3, ‘a nice mansion’….is that something you can back up with some facts? If this was really true, some very savvy benefit claimants that I know round here would be living in nice mansions. Hardly shocking to find that they are, in fact, living on a grotty council estate. I never stop being amazed at how willingly some folk swallow these benefit stories. Yes, there are a few examples that seem to stand out but you can be certain you are not getting the full story from the Daily Mail or your mate down the pub and ,even if true, they are not the norm.

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  • george monsoon says:

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  • george monsoon says:

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  • stillthinking says:

    I am sure that the lives of those on benefits are hard, however, in property I don’t think so, and I don’t see that the taxpayer should subsidise housing they are unable to afford themselves. Workers should never be in a position of jealousy towards the unemployed, and clearly in the UK they are.
    I have posted this before, but I will repeat myself, what makes it so much worse is the knock-on effect on the cost of private accomodation, creating a pay twice situation. Pay the taxes to support social housing, and then pay additionally on the accordingly higher rent level.

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  • [email protected]

    I feel that I’m paying twice for housing in the way you outline above. And it does make me angry.
    I have seen newbuild flats, priced around £600 per month for those who work, empty for several months, and eventually ‘rented’ out to the unemployed.
    I do agree that there is a need to ensure that housing is available to all, but sometimes I cant help feeling that I’m a mug for working hard !

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  • [email protected]

    I feel that I’m paying twice for housing in the way you outline above. And it does make me angry.
    I have seen newbuild flats, priced around £600 per month for those who work, empty for several months, and eventually ‘rented’ out to the unemployed.
    I do agree that there is a need to ensure that housing is available to all, but sometimes I cant help feeling that I’m a mug for working hard !

    sorry forgot to add the password, repeat post alert!

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  • richc said “LHA has nothing to do with “markets” — it’s the exact opposite. It sets an artificial floor under which market rents won’t fall…” –
    Correct. I think one must note that LHA is the marginal value of the merit good known as a home. If it were not a merit good we would have cheaper housing for the majority but more homelessness, there must be some trade off made, as cold-hearted as it may seem, and maybe the marginal value is indeed set too high by our state. Is there any way we may decentralise this decision making process without adverse impact to the poorest of our society?

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  • mark wadsworth says:

    Thanks to Drewster for pointing that out. Total housing benefit/council tax benefit are roughly half of all working age benefits paid out.

    As they are an indirect subsidy to landlords, they ought to be scrapped and rolled into a slightly higher Citizen’s Income (or higher tax free personal allowance) and/or scrapped and the amount paid out deducted from the amount of money that is collected via LVT (i.e. LVT replaces council tax minus council tax benefit and so on).

    @ 666, sure, nobody wants people to be homeless, but they can always use old army camps or all the properties that John Prescott emptied or something.

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  • Oh – and if your partner (whether you run your finances jointly or not) becomes unemployed, but you earn over £16K (including in London) they are not entitled to job seekers OR housing benefit. This is a triple whammy for some – pay extra tax; pay extra on housing due to the marginalisation; don’t get the benefit when it is needed – that is pretty sick in my opinion, to paraphrase Sasha Baron Cohen, if we have a welfare system it should be well fair.

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  • ^^ correction – have £16K savings (not earn £16K)… i.e. are saving for a deposit.

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  • I was actually wrong about how much you can claim in LHA where I live. Rather than 30,000 pounds a year, it’s 32,700 a year. For a point of reference, I rent a house with 7 bedrooms, on two acres (gardener included), in a nice village, and I pay less than the LHA.

    Anyone doubting the figures can look them up themselves: https://lha-direct.therentservice.gov.uk/Secure/Default.aspx

    I’m not for throwing people out on the street, but do they really need to have their own indoor pool? It would be far cheaper for all involved to build more social housing (and allocate it to people in actual need) rather than buying votes by giving away council houses and then paying benefit claimants to live in mansions.

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  • stillthinking says:

    It isn’t a question of throwing people out on the street, which is a red herring to prevent change. More a case that long-term social housing shouldn’t exist in extremely high cost places like Westminster, and that there should be a distinction between private and social housing.
    Where there is excessive need for additional social housing, the council should build additional properties, not seek to muscle in on private accommodation.
    In a way, this all comes down to the UK still having a housing shortage(which we do irrespective of price moves) and rents still being very high in comparison to earnings.
    Having seen the Irish budget, I think that this kind of resentment will get worse in the UK, as taxes move up and services are cut.

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  • Surely the amount of benefits someone gets is dependant on how much rent the LHA pay, which in turn is dependent on where the individual lives. Would it not be fairer to have a fixed amount? i.e. your benefits are £X per month. You get to spend as high a proportion as you like on rent, and the remainder on anything you want. Now get lost. Admittedly those in central london would be worse off – but if they are unemployed (i.e. if they don’t work in central london) is there really any need for them to be there? They’ll just have to move somewhere cheaper. If you want to live in central london, get a job there. Free market.

    I am turning into a rubbish spouting tory.

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  • stillthinking says:

    What about the crazy idea of social benefits per person (excluding child benefits) not exceeding how much money you would get if you were working.

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  • @ richc. I have visited the LHA site via your link. I had to make the family two single people with 4 children, 2 boys & 2 girls before it would allow you a 4 bed home. I then used Oxford as you have not told us where your ‘one hour outside London’ home is. the LHA is £309 per week. That’s just over £15k and about the right price for that area. Where and how do you get it to chuck out a £33k figure?

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  • To add to the above, when I ran the same search where I live the LHA for a three bed was less than I am paying for a small two bed bungalow.

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