The benefit caps will shortchange rents approximately £600 per year for the average rented property, except in London, where the shortfall is drastically higher.
Miles Turner, director of eviction specialists, Turner & Howard, is urging tenants to contact their landlords if the benefit caps will result in arrears.
“If tenants have not already done so, they need to contact their landlords immediately if they cannot afford the rent due to housing benefit caps. We are urging tenants and landlords to negotiate rents.
“While the average rent loss will approximately amount to £600 per property on an annual basis in most of the UK, landlords need to note that if they instigate repossession procedures, it could cost them considerably more due to eviction costs and rental voids.
“The key is to communicate. Tenants may be afraid to admit to their landlords if they cannot pay the rent and in return stack up arrears. If left until too late, tenants may find themselves in considerable debt and landlords may have problems meeting their buy-to-let mortgage payments.
“We cannot even begin to assess the effect the caps will have until after March when we can gauge repossession figures once UK eviction statistics are collated and released.”
The housing benefit caps have come under strong attack from the private rented sector, housing and welfare groups. The caps, which have been introduced by the DWP is a result of the increasing housing benefit expenditure, which reached about £21.6bn in 2011 and is expected to reach a level of £24bn by 2014/15 without benefit reform. The government believes rates of housing benefit in the private rented sector have increased to unmanageable levels and is unfair on people earning a reasonable wage who could not consider entering rental agreements which people in receipt of benefit can.
Research reveals 48% of the 7 million rented properties are private rented sector properties and around a quarter of these tenants receive Local Housing Allowance. Claire Turner, Director of the Landlord Information Network (LIN) works extensively with landlords to ensure tenants receive the correct benefits, Claire said:
“If housing market trends continue the UK private rented sector will be bigger than the social rented sector by 2013. Unemployment is rising and the number of tenants claiming benefits rapidly increasing, meaning landlords and tenants need to understand the Housing Benefit regulations in detail to ensure that income is maximised and arrears are minimised.”
Ben Reeve-Lewis, property writer and housing legislation expert is also concerned about the effects the caps would have on tenants in the private sector, “Housing benefit cuts, particularly in London are resulting in an economic cleansing of benefit claimants who are being forced out to areas of cheaper rent, as far away as Margate on the south coast.
“Concerns about benefit cuts are spreading. The Chartered Institute of Housing recently estimated that 800,000 housing benefit tenants are now being priced out of the rental market by these cuts. In a market that is overloaded with salaried tenants looking for properties and rising rents I see no reason why landlords would bother to negotiate a lower rent with tenants on benefits”
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