328 landlords responded to Upad’s survey. 39% of them said that the rents they collect would be impacted by the new levels of LHA; 61% said that they would not be affected. Broken down geographically, 90% of those letting in London and the South East said they would be affected; a third of landlords in the Midlands and North West, as well as a quarter of those in Scotland, say they will be hit.
Those whose rents were above the proposed caps were asked what they intended to do. Half said that they would ask their DSS tenants to leave and let the property within the private sector. Another 34% said that they expected their tenants to replace lost housing benefit from other sources of income. Only 12% intended to lower their rents to the new LHA levels
If these figures were replicated across the UK, 340,000 of the million people currently claiming Local Housing Allowance could find themselves out of a home.
James Davis, Upad’s CEO, commented: “Some property industry observers have speculated that LHA levels have artificially inflated the market and that removing them will lead to a general lowering of rents, but clearly many landlords disagree with this. We expect private sector rents to hold their value, which will only encourage landlords to abandon the social sector.”
Asked to comment on the proposed changes, many landlords highlighted administrative problems with the way that housing benefits are paid:
“I shall not be letting to Housing Benefit tenants again because of the difficulties in collecting rent since the system changed so that rents are paid direct to tenants.”
"I am looking forward to the day when HB can be paid directly to the landlord for all claimants.”
“The housing benefit should be paid to the Landlord (who is the person taking the risk) and not to the tenant.”
“Landlords should be paid directly to prevent the money being spent on drugs, alcohol and wide screen TVs.”
Davis added: “The proposed levels of rental amounts are only half the problem. The bureaucratic and obstructive system of payments discourages many landlords from operating in the social sector, whatever level of rent they need to achieve. Unless this is addressed as a matter of urgency, we can expect to see private landlords wholesale abandon the social sector.”
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