Landlords could be forced out of UK rental sector due to LHA cap, it is claimed

Published 04th Nov 2011

UK Government caps on housing benefit payments could force over three quarters of landlords out of the Local Housing Allowance (LHA) market, according to a survey by the National Landlords Association (NLA).


The survey found that 77% of landlords who have LHA tenants are either considering or already taking steps to reduce their involvement in the LHA market.

One quarter of respondents say they are already reducing the number of tenants they have on housing benefit payments, while half plan to do so in the future.

The changes see benefits based on the thirtieth percentile of local average market rents, rather than the previous fiftieth percentile. The caps limit the maximum benefit available based on the property size.

NLA research has found the LHA cuts will have a varied impact on families across the country, with some losing hundreds of pounds. Government figures show nearly 1.3 million households currently claim LHA across the UK.

One example of how the caps will reduce LHA payments, based on rates from March 2011 before the cuts began in April is a one bedroom flat in Willesden, north west London. Before the cap, the rate was £275 per week, now it is £250 per week, a £25 cut per week.

Another is a five bedroom house in Guildford, Surrey. Prior to the cap, a family would have received £691.15 per week, now it is capped at the four bedroom rate of £400 per week, a £291.15 cut.

‘The shortage of housing across the UK is putting even greater pressure on the private rented sector. Capping housing benefit payments at this time will only lead to more people struggling to pay their rent,’ said David Salusbury, NLA chairman.

‘The Government must monitor the impact of the roll out of LHA caps. It is essential that tenants are not left at risk and that landlords can continue to provide this accommodation for the more vulnerable in society,’ he explained.

‘The number of people claiming benefits continues to rise, and these caps could result in fewer affordable rental properties for benefit claimants,’ he added.

Source: ' Property Wire '

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