From the TUC

Benefit Cuts will hit tenants, not landlords

11 May 2012, by in Society & Welfare

One of the justifications for the benefit cap in the Welfare Reform Act has always been that Housing Benefit (which is the main benefit that will be affected) is effectively subsidising landlords’ high rents. As David Freud told the Work and Pensions Committee:

We are expecting a large number of people who receive less housing benefit to be able to negotiate their rents downwards.

I’ve always been sceptical about this claim and the latest mortgage and landlord possession statistics from the Ministry of Justice suggest that this is a really bad time to rely on tenants’ ability to persuade landlords to cut their rents.

Mortgage posession actions came down after a peak in 2008 and have not risen again – the MoJ argues that “lower interest rates, a proactive approach from lenders in managing consumers in financial difficulties, and various interventions, such as introduction of the Mortgage Pre-Action Protocol” made a difference.

But landlord posession actions have been rising since early 2010:

We shouldn’t over-interpret these figures, but you’ve got to say that there’s no sign of landlords being reluctant to repossess when they think they need to. It does not look like a good time to rely on tenants’ strength to avert a catastrophe of social cleansing.

2 Responses to Benefit Cuts will hit tenants, not landlords

  1. Bert
    May 14th 2012, 12:58 pm

    Hi Richard, are you aware of any studies or figures that look at the actual impact of HB on local rents. I keep hearing people state that HB has been the main driver of rent rises over the last decade or so, but can’t seem to find any papers that either support or disprove this – can you help? cheers, Bert

  2. Bernie Dunne
    May 21st 2012, 3:45 pm

    We here in aplacetorent firmly believe that the cuts are affecting tenants, but also by default, the landlords too, as tenants are falling into arrears with rent as a result of having their incomes/ allowances cut. However for the landlord in most cases, the mortgage payments remain the same, and thus there is a knock on effect with the landlord falling in arrears on the mortgage. its a no win situation
    Bernie Dunne