A new report from the National Housing Federation (NHF) claims that private landlords are “lining their pockets” with housing benefit.
However, the National Landlords Association (NLA) has spoken out against the jibe, insisting that housing benefit is not a hand out to private landlords, but a support for tenants to pay their rent.
According to the NHF report, private landlords received £9.3 billion in housing benefit last year – double the amount recorded ten years ago. Back in 2006, private landlords received £4.6 billion in housing benefit.
The NHF, which represents housing associations, also found that a lack of affordable housing has meant that 42% more private tenants receive housing benefit now than in 2008.
The document also suggests that if all of those in the private rental sector had lived in affordable housing in the past seven years, the public purse could have saved £15.6 billion.
The NHF calculates that more than £1,000 a year extra is spent on housing benefit for a family living in the private rental sector (£5,705 compared to £4,638 in the social rental sector). This figure goes up to £3,000 more per year in London.
The Chief Executive of the NHF, David Orr, comments: “It is madness to spend £9 billion of taxpayers’ money lining the pockets of private landlords rather than investing in affordable homes.
“Housing associations want to build the homes the nation needs. By loosening restrictions on existing funding, the Government can free up housing associations to build more affordable housing at better value to the taxpayer and directly address the housing crisis.”
Almost double the proportion of families claiming housing benefit are now in work (47% compared to 26% six years ago), according to the report.
Additionally, housing benefit recipients living in the private rental sector now earn an average of £4,000 more than six years ago.
However, the NHF claims that homes in the private rental sector “are of lower quality, with one in three failing to meet the English Housing Survey’s Decent Homes Standard”.
But Richard Lambert, the Chief Executive of the NLA, responds: “Housing benefit is not a subsidy to landlords; it’s a support for tenants to ensure they can pay for their housing.”
He adds that the proportion of landlords letting to housing benefit tenants has halved in the past five years, as “benefit levels have not kept up with rents”.
He continues: “The NHF is clearly still reeling from the news that its members have been ordered by Government to reduce spending over the next four years, so it comes as no surprise that they are looking to shift the emphasis and point the finger elsewhere.
“The private rented sector has grown as the market responds to the increasing demand for homes, particularly from a growing proportion of tenants whom the social sector and housing associations simply are not able to support in the current circumstances.”
Landlords, if you already do or are considering letting to housing benefit tenants, remember that it is vital you protect your rental income.
Following changes to the welfare system and introduction of the Universal Credit scheme, those letting to housing benefit recipients should be aware that they will not be paid housing benefit directly, as it is now the tenant’s responsibility.
If you’re worried about your tenants falling into rent arrears, you should put Rent Guarantee Insurance in place. This peace of mind cover ensures that you still get paid if your tenant can’t or won’t pay the rent.
Just Landlords accepts housing benefit tenants as part of its Rent Guarantee Insurance. Click here for more information: https://www.justlandlords.co.uk/rentguaranteeinsurance