Newsroom

Tories back BPF campaign to get benefits paid to landlords

The Conservative Party has come out in support of landlords by agreeing that private rented sector tenants receiving Local Housing Allowance (LHA) should have the right to choose whether their allowance is paid directly to the landlord.

The British Property Federation (BPF) has described the move as a ‘victory for common sense’ after the government’s disastrous plans to ‘empower’ those on benefits led to masses of rent arrears.

The current system see LHA paid directly to tenants and as a result, millions of pounds of rent have not been passed on to landlords.

The BPF has led a high profile campaign against the change – which came in a year ago - over the last nine months. The move caused a cut in housing supply because landlords have been unwilling to rent homes to people on benefit.

In May 2009, 4.4 million people received housing benefit and, of those, 670,000 claimed local housing allowance. As a growing number of landlords withdraw from this sector as a result of LHA not being passed on, the BPF had warned that councils would find it increasingly difficult to house people.

Ian Fletcher, director of policy at the British Property Federation, said:

“Direct payment has been an unmitigated disaster for many landlords who have lost thousands of pounds in unpaid rent as a result of tenants failing to pass on their LHA. The Conservatives have shown they have listened to those on the ground and we are glad to see this decisive stance being taken. Government should stop pussyfooting around on the issue and similarly give tenants the choice of payment to them or their landlords.

The Conservatives said in a statement that “the current Local Housing Benefits system has led to a lack of housing availability and contributed to the issues of Broken Britain”.

Speaking at the national conference of the homeless charity Crisis in Birmingham yesterday, shadow housing minister Grant Shapps said:

"Fearful that rent money may never be paid, some landlords routinely include the words NO HB in their ads, further restricting the supply of housing for affordable rent. At the same time some of the most chaotic tenants have struggled to manage their finances, meaning that the cash is already spent by rent pay day.

"It strikes me that the current situation is bad for everyone and I can see no reason why people on Local Housing Allowance shouldn't enjoy the freedom to have their Housing Benefit paid direct to their landlord. Our proposal will destigmatise the system and increase the amount of affordable homes available."

A survey of 300 landlords in the Liverpool area of England showed that £106,000 was lost between 2008 and 2009 as a result of tenants not passing on their allowances to landlords. The average loss per landlord per year as a result of the policy was £1800.

Lynn Smith, chair of the North West Property Owners Association, which conducted the survey, said the results ‘reveal, in stark clarity, the failure of the government’s local housing allowance policy’.

Liverpool-based Smith, who is herself a landlord, said problems were evident in the city from the outset. The association felt compelled to carry out its survey following widespread frustration over ‘the landlord basically funding the tenant’s lifestyle’.
She said landlords have no hope of getting any money back, and even trying to take possession of their properties through the courts can take months. There are streets in Liverpool where landlords have boarded up their houses.

“They’d rather pay the council tax and leave it empty than have the hassle. At a time when the councils are more reliant than ever on private landlords to accommodate the rising tides of benefit claimants, we have policy that simply discourages private landlords from taking on benefit tenants.”

For more information and all PR and media queries, please contact Andrew Teacher, Head of Media, on 020 7802 0113 / ateacher@bpf.org.uk.

Notes to editors

Local housing allowance

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/On_a_low_income/DG_10018928

Local housing allowance was introduced in April 2008 and is a new way of calculating housing benefit for tenants living in the private rented sector. The local housing allowance is paid direct to tenants themselves and currently only the Local Authority can determine whether the tenants can have the local housing allowance paid direct.

Crisis Research

A recent survey by the homelessness charity, Crisis said that 82% of respondents had noticed tenants falling behind on their rent since the introduction of LHA. The same number said that the Allowance was leading to more tenancies being terminated.

More than two-thirds reported landlords ‘stipulating conditions over and above those requested for working tenants’ while 38% said that fewer landlords will accept Housing Benefit recipients since the introduction of LHA.

Crisis research – Local Housing Allowance: One Year On http://www.crisis.org.uk/research.php?fullitem=237

Social Housing Waiting List

There are currently 1.77 million families on the Social Housing Waiting List.

The number of families on the Waiting List has increased by 748,000 since 1997

1 in 12 househoulds in England were on the Waiting List in 2008

West Mids and Birmingham:

Birmingham has seen a 56% increase in its Social Housing Waiting List since 1997

There are 56,000 extra West Midlands families on the Social Housing Waiting List compared with 1997 (a 62.9% increase)

6.7% of all households in West Mids are on Social Housing Waiting List.

5% households in Birmingham are on the Waiting List

(DCLG Live Table, Table 600, http://www.communities.gov.uk/documents/housing/xls/table600.xls)

Cost to Landlords

Research by the National Landlords Association has found that the cost to landlords of collection LHA rents amounts to £219.4 million, an average of £4,500 per Landlord per year

NLA research - http://www.landlords.org.uk/support/campaigning/lha.htm

For more information and all PR and media queries, please contact Andrew Teacher, Head of Media, on 020 7802 0113/ 07968 124545/ ateacher@bpf.org.uk