Housing benefit cuts: a radical and unpredictable experiment

I remmember when we had a fair rent officer and it worked why did the govermet change it

When LHA came into play by the Labour goverment most lanlord knew the pit falls an avarge market rent ???? im the area I but property Housing Benifit went up 20% to the new LHA rent and all benifits would be paid to the Tenant how stupid can we get

and to top ot if a Tenanat finds a property lower than the market rent they can keep £15.00

You could not make it up

LHA dosent work most Landlords stay well clear of the system be cause of its pit falls

the problem is where do we go now my feeling is its Tenants homes so you cant make it rerospective this is going to create hardship and its very unfair

Bring back the old system FAST it wasent the best but atleast it made sence and bring back the Fair Rents officer

You might be supprised that a Landlord dosent like housing benifits but i feel its totaly wrong to ask tax payers to pay for houseing that thay cound not afford to live in especialy in the south of england

Of course landlords will reduce rents - it's simple market economics (albeit in a heavily rigged market!) - you reduce demand (by which I mean the amount of money available to pay rent, not the woolly-headed definitions of demand that usually get bandied around when the housing market is under discussion!) therefore, unless there's a corresponding drop in supply, rents have to fall.

And there isn't going to be any reduction in supply (not unless they all get put up for sale, which will crash house prices) so the reduction in LHA MUST feed straight through into lower rents and a lower burden on the taxpayer.

The only losers in this will be buy-to-let investors, plus a few hitherto very lucky DSS scroungers who've been able to live in desirable areas at the taxpayer's expense. Can't say I'll be shedding any tears for either category......

When I was starting out in work I shared a house with 4 others, it worked out pretty cheap. I certainly couldn't afford a one bed flat in London, and I'm surprised by how much can be claimed. It seems to me that the proposed cuts are still pretty fair, £400 pw for a 4 bed would get you a very nice place even within Zone 2 London.

We need to do more to support people in low paid jobs, who must wonder why they bother working. If we make a big effort to support people on minimum wage we could solve a multitude of our society's problems.

Demand & Supply economics..London is uber expensive however people have to live somewhere including the so called DSS SCROUNGERS(not all are scroungers). But in reality the situation has arrived of its own making. Housing crisis,lots of Buy2 let lanlords(myself included)& high rents. People from the local areas fine but when Asylum Seekers given the right to remain & the feckless,the reckless & the shysters & SELF CREATED one parent families start dictating the terms where THEY WANT TO LIVE then its a different ball game. Landlords ? Well theres the the VERY GOOD,GOOD,BAD & INDIFFERENT. SAME AS TENANTS. As for the big firms making millions. PAY THE LOW PAID WORKERS MORE SO THE GOVERNMENT DONT HAVE TO SUBSIDISE PEOPLES RENTS

Why do the scroungers and sponges need to live in Londan anyhow - if they have no work to go to, there is no reason why they cannot be dispersed around the country to areas with more reasonable rents. Shelter may well be concerned, however pass the total housing benefit bill to them for payment and i suspect that concern will be short lived. A lot of these scroungers rent each others property out on paper, even though they are actually renting it themselves and get money for rent from the taxpayer via the other tenant plus the same from the benefit agency.

The problem is that this is a reaction against the outlandish abuses of the system which have been allowed to happen . In fact it is my view that the left wingers in housing and benefit departments are responsible for what has been happening . So consequently they have brought this upon themselves and all those who have been getting away with incredible benefit windfalls for years .

Whether £400 a week is fair I don't know . Pensioners manage on just over this sum for a month , so it makes one think !

What is totally wrong is that we have enough of our own benefit seekers to cope with . We really cannot afford to pay out to the world's immigrants . It's just not on >

It is unfair to pay £104,000 a year to keep someone in a nice area of London. You can build a house for that in the north of England. Lets build some more houses instead.

I know its tough on those who are living in London but what about all those who have their houses repossessed in hard times. If you cannot afford it you can't have it.

It is one of the greatest decisions Govt has taken to cap the housing benefit. We spend £230 billion on housing benefit from our yearly budget of £620 billion. Is it not too much for housing benefit? Many people do not go to work but live lavishly. They live in Central London; rent massive flat, massive houses, use expensive cars, iPhone, latest computer for each child, Nintendo, Wii, iPhone for each child, free medicine, free dentist, half price bus fare, free school meals, free clothing and so on. After all, they have stress free life. I work full time, cannot afford a line rental phone (Contract Phone), still in PAYG, cannot afford speedy broadband, dentist, a small flat etc. Is this fare to the working class people?

I think, it is our job to change our lives. If you earn and can afford, live in Kensington, if you cannot earn and afford, go to the place what you deserve. It is not Govt’s responsibility to keep those unemployed people in the Central London. You will sleep whole day, not try for a job and at last will blame Govt and job crisis. It is funny. I would not accept it. Go out and find a work. Let those live in Central London who deserves it (THE LOVELY WORKING CLASS). If you live on benefit, live where Govt (We) can afford you to live.

It seems to me that we all should work to support those unemployed people, why cannot they support themselves.

At last I would say thank you, Mr Chancellor for your great decision (Squeeze it even more, better for our country).

My income limits me to living in Southend over London. So I am a bit annoyed to find out that there are thousands of people who rely on my taxpayers money to live in London for nothing or a big subsidy. The welfare state is supposed to be there to prevent people starving or freezing to death, that's it. It is not there to ensure people can live "where they have roots" or "where they choose". There are plenty of houses in the north of the country that need people to live in them. What dictates where you live should be what effort you are willing to put into it (work) and how skilled you are (value). So anyone living in a house in London who does less than 37.5 hours work a week should be shipped to Telford so someone willing to put a positive contribution into our society can live there instead. I will help put the loafers on the van; just let me know and I will take a day's unpaid leave to help!

I haven't met one person who thinks that paying £2,000 a week of tax payers money is a good idea. But then again I don't know any landlords or people living on massive houseing benefit.

As Conservative/Liberal voter, I wrote to my (Liberal) MP approving the housing puts in principle but warning her that if they were applied in doctrinaire fashion to 70+ residents who had lived in an area for 30 odd years and who had to move in consequence, I would be changing my vote. Even though previous Governments were responsible for the current messy situation, that is no excuse for uprooting the defenceless, removing them from their support structures and probably shortening their lives in consequnce. Politics is the art of the possible and in my book, suck actions are "impossible" in the sense that no sane person would countenance them.

I was a small landlord in Brighton Sx. I found that many graduates from the two Universitys did not want to return to their home ,but stay on and maybe become self sufficient. In reality they were not financially independant and just used the state to support their new chosen life style. When they applied for the apartment, I always wanted to know what they did for a living and how were they to pay the rent. The numbers who said dont worry I have applied for Housing Benefit and that will take care of the rent were legion.. I never took any of these well educated people into the apartment as I did not agree with Housing benefit for the fit and able on principle. It is part of the benefit system which has been worked and exploited to a large extent by the younger generation to support a lifestyle which removes the motivation for hardwork. Of course they will deny it but they are not really trying to become financially independent. Mummy and Daddy have been replaced by the State. The same with many single mothers. They prefer the state as more reliable than a Husband. I am told that some when the child reaches 18 and the benefit is about to finish they suddenly find themselves pregnant again. You see it is all about learning to exploit the ridiculous system, which has finally blown up having reached £20 Billion p.a..

All these people who state quite blithely that they cant take a cut in their money ,as though they had actually earnt it. They really believe that the Government has its own money to distribute. Any Politician who tries to tell me that it is right and proper to pay £100000 of Taxpayers. money to House someone else I will say you are Mad, living on another [planet, Just buying your way out of difficulty with the Taxpayers money and you are NOT FIT FOR OFFICE.

I'm bored of this already this is a London only issue. Average rents in the north are so far below the caps as to be laughable! £1000 per month for a 1 bed flat and £1600 pcm for a 4 bed house!!!

While the whole world has been in a housing bubble, Londons house prices (and subsequently rents) are just insane. And the incredibly generous LHA system has been partly to blame.

So what will the consequences of this be? A few people will have to move, but then if you live somewhere you can't afford why is it the taxpayers job to subsidise you? Also you are taking up space and driving up rents and prices for someone who may be able to afford it.

Will London collapse? No, it will always need low paid workers, it may be painful short term but prices/rents/wages will equalise eventualy.

Housing benefit should return to being a safety net and not a subsidy.

I live in the suburbs of Outer London but I want to live in Kensington. It would seriously reduce my commuting time and costs and, apart from anything else, would enable me to attend theatres without undertaking lengthy and expensive journeys. There are better and more varied shops to favour with my custom and, of course, the Royal Parks are an absolute delight to visit. In summary, I reckon that living in Kensington would enhance my quality of life no end .

I knew all this, of course, when I moved to the suburbs but I thought I had no choice because I couldn't afford to buy or rent in Kensington.

My question is this. Can I claim compensation for being a victim of social cleansing and not receiving the Housing Benefit to which I was entitled? Constructive answers would be welcome.

" would enable me to attend theatres without undertaking lengthy and expensive journeys."

FROM THE SUBURBS? Do us a favour and stop sprouting nonsense.

I live in DEVON , now THATS an expensive journey to WEST END theatres!

We all seem to be singing from the same hymn sheet . This is encouraging . Will be interesting to see how all this pans out

Who is lauding London's diversity? Most cities in Britain are just as diverse, in fact the whole country is diverse - there is nothing special about London except the amount of money taxpayers spend on subsidising rents there.

Adam Eve,

If you really do attend London theatres from Devon then I must give up my entitlement to Housing Benefit in favour of you. Mind you, you might find a lunatic asylum in London that would house you comfortably.

Rents will find their own level. I am a landlord, I would love to have £400 a week rent, 2 bedroom terr, £75 per week in my area. So why not ship the out of work / scroungers to my area.

Speaking for myself, I have givern up on DSS tenants, they are not worth the space, I would rather sell my properties then go back to them.

"Mind you, you might find a lunatic asylum in London that would house you comfortably"

If its the one you live in Bob I am not interested..

Adam Eve,

As I noted, Adam, I live in the suburbs.

The housing bubble in London has a lot to do with foreign investors, for example, rich Greeks buying up property in London during the Greek crisis.

As such it cannot all be blamed on the last Government.

The problem as I see it is to bring London prices/rents to sensible levels, without up heaving families with children in school, and old folks with family and friend connections in the London area .

It seems to me that this could be an impossible task whilst foreigners want to invest in London properties.

Any spare housing that comes onto the market is likely to be snapped up by these foreign investors, and profits from them go abroad.

Landlords are wicked

Tenants are poor

That's how much we've progressed

In a hundred years or more.

The changes make sense. Leaving things as they are is indefensible.

When I bought my first house it had to be miles out of London where I worked . To live in Knightsbridge you were competing with Sheiks etc. Renting was out of the question. Likewise if you went to the local authority they just laughed at you unless you had 6 kids or had actually come out of a Council House Family. Under the previous Govt's policy we were all effectively cleansed from living near our Work. Nothing was said then or did the Labour party care of course not, as our lower middle class Hard workers didnt Vote Labour. Its as simple as that. We were ethnically cleansed from the City by Labour and then kept short of money by Tax and ever increasing fares to get to our place of work. The big uplift in my personal wealth did not occur until Mrs Thatcher and Major appeared on the scene. Never the less what kind of politician would invent Inheritance Tax for the small working Family man who Has saved all his life to leave something to his Kids ,out of overtaxed income a confiscatory rate of 40%? Only a complete knave and conman ,who will then pay rent in Kensington of £!05000 p.a. for someone from overseas. Roll on the Tea Party over here.

Graham ... you have said it all . The real left wingers and Troskyites in the Labour party are a really horrible twisted lot . Full of resentment and hate for us people who get on with their lives and WORK . they have infiltrated housing and benefits and other departments and are responsible for the insane excesses we are now learning about .

There has to be a sensible arm of the Socialists somewhere , but when they allow people like the foregoing to have influence , as they always do , they lose all credibility .

Dyslexic Landlord, When you say "LHA dosent work most Landlords stay well clear of the system because of its pit falls". I almost believed you until I heard on the radio today the 40% of all UK private rentals are housing benefit claimants. Allowing the claiming of unlimited rent must have a massive affect on the price of private rents. I think the housing benefit system is one of the key factors supporting the high price of rent.

FAO Johnathan

I only talk of my experince on running my own bussiness

LHA is not my bussiness model as I said eariler I dont like LHA its full of pit falls which I dont need to go into its all been said before

There are 1000s of tenants out there wanting good accomadion who are working some are families some singles

Most estate agents in my area dont take LHA so im not the only one who dosent like it

Most BTL Mortgages also exclude LHA and you know the reason why its problmatic

I do have Tenanats who have top ups but they are working I would ofcourse help and support existing Tenants who lose there jobs and they then would become LHA but thats a very differant story

If 40% of landlords who do take LHA there are 60% that dont and that fig says it all

LHA dosent work and needs to be reformed

I dont think it will have much of an effect on my bussiness model but if it did you just have to addapt and move on

The avarage LHA for two bed property is £103.00 per week and ive read that it my be dropped between £10.00 and £12.00 per week its hardly going to breack the bank of Landlords who buy on a yeild of 8% to 10%

hope this answers the question but its only my opinion

Rents will not go down. There will be a steady readjustment in supply until the market equilibrium is reached. Some Land lords will drop out and remove the property from the rental Market, if the optimum rent cannot be obtained. We have seen all this before when rents were controlled. You could not find property to rent for love nor money. You see there was no profit in it for people to invest in property. The Govt of the day had to de control rents to increase quality and availability in the private sector. Of course Landlords and agents are going to take Housing Benefit rents of a £100000 p.a. if the Trotskite Town Hall apparatchics shell out the money for every whinning case that turns up from Timbucktoo. Its Capitalism milking The Communists, .The trouble is its OUR MONEY.

One of the main features of this scenario/problem is there is a fixed resource "the number of houses that exist". When someone moves out someone else will move in, as houses generally are not left empty. Currently the only empty houses will be in areas where rent is really low (market forces). So these areas might get a boost from people being forced out of high cost areas. I can see this as a way of boosting poorer areas with new people who want to rent and reducing the rent of richer areas where housing benefit is proping up the market in a way that it won't be in the future. The thing I haven't quite calculated is how the new rule of housing benefit paying a maximum of the lowest 30% of the market rates is going to affect prices.

FAO Johnathan

I think you are talking a lot of sence it may well have the effect you mentioned

God knows what will happen next and it will worry a lot of Landlords and Tenanats which is not a good thing

but we live in very uncertin times

best of luck

I just had a thought: If housing benefit rentals represent 40% of the market, how can this 40% get the lowest 30 percentile of rental rates? It's like trying to fit a pint and a third into a pint glass.

There is one other issue that has been overlooked.

With benefits cuts, there result could be Kosovo type cleansing, as described by some.

This will mean that the poorer will move from London and SE to the North, making the North South divide worse, with all of North's problems made worse.

Including Sheffield's?

To develop my point on the North South divide further, I would like to note how it will affect Councils.

The London and SE, councils are going to get rid of the poorest who need Council care, thus having to deal with reduced demand in times of cut backs, whilst the Northern Councils are going to experience increased demand from the London and SE movers in times of reduces funding.

No wonder the cross Party body looking into effects on front line services is concerned.

The North is going to be hit by public services unemployment and London and SE movers - increased demand for services, whilst about the opposite is going to happen in London and SE.

To equate the burdens of Councils in London and SE v The North, poorer people on benefits moving should carry with them a premium on the lines of pupils from poorer backgrounds, to equate the forces of demand.

I.e. A poor family moving to the North should increase the budget of the Council it is moving to, whilst reducing the budget of the council it is moving from.

I cannot understand what the problem is. Many years ago I gave up on the Housing Benefit system due to council

incompetence,tenant failure to respond to council enquiries,and both the life style and living habits of some of the HB claimants.

Added to this was the fact that should a tenant complain ---for whatever reason to the the council-- the complaint was always accepted at complete face value.

The game was not worth the candle.

One can only hope that that vilification that councils have heaped upon private landlords over many years will not deter these same councils from finally accepting that they need private landlords far more than we need them.

"With benefits cuts, there result could be Kosovo type cleansing, as described by some.

This will mean that the poorer will move from London and SE to the North, making the North South divide worse, with all of North's problems made worse.

Including Sheffield's?"

WHY WOULD these people go north UNLESS they came from there in the first place?

Why would they not instead go WEST to WALES, DEVON , DORSET or CORNWALL for example, OR even FURTHER NORTH TO SCOTLAND.

PLUS if they cause a greater burden on these other councils then these councils would NEED to EMPLOY more people to service them.

Adam Eve

Thank you for widening the argument to cover other areas. The real issue here as you indirectly point out is Pauper Britain v Affluent London and SE.

As regards reasons for moving, these are benefit cuts, not other reasons as to where they came from originally

Finally the Councils moved to, do not have the finance to employ more people, and most if not all are currently engaging in redundancy exercises.

Have councils in the South been given extra money for housing people from the North and for accommodating immigrants ?

Ines

Here in the Midlands I am aware of benefits people moving from London and SE to the Midlands, but not aware of any moving in the other direction. Can anyone help with figures.

As regards immigrants they have no benefits for the first year, so most if not all of them are at work, and paying for their accommodation out of earnings. Very often in the private sector.

Some other issues/thoughts on matters relating to pauper Britain v Affluent London and SE.

Besides the suggestion of premium approach as with pupils, a more radical, and I thought we had a radical Government, approach would be as follows.

Benefit cuts as announced should apply to London and SE and not elsewhere. That is where the problem is. Some Citywire readers have identified average rents of about £80 or £90 for a two bedroom house. At £40 or £45/bedroom this is hardly extortionate.

It is London and SE it is rents that are the problem.

If one of the suggested approaches was taken up or a mixture of the two, then the flow of wealth from Pauper Britain to London and SE, would be reduced.

An example of London and SE excesses, FTSE Directors recent 55% increases in salaries, most of whom, if not all, live in London and area

or at least have properties there. Talk about austerity.

The massive housing benefit bill in London should be paid solely by London taxpayers. Why should Scotland, Wales and N Ireland taxpayers have to subsidise these leeches. London welfare is a huge financial drain on the rest of the country and all the wealth generated from the people of Scotland, Wales and Ireland gets sucked down there and wasted. This is why the rest of us are getting poorer and poorer.

London taxpayers hugely subsidise the rest of the country, especially Scotland. There is no need for London welfare to be a drain on anyone - the whole situation is a gerrymandering creation of the last government. Similarly people on benefit were invited to go to coastal resorts like Brighton and Bournemouth to fill empty seaside boarding houses and totally change the voting patterns of those towns.

Ines

What is your proof that London taxpayers hugely subsidise the rest of the country. In fact probably most of tax avoidance takes place in London and SE. e.g. Vodaphone. They do not pay their fair share of taxes.

As regards London rents they are ridiculous, and if there was no movement out of London as described they would have been even more ridiculous. Also have not heard of empty seaside boarding houses complaining, which in any case provided a cheaper option than London.

Finally I thought we were all in this together, but it would appear that some like FTSE 100 Directors, predominantely in London and SE, are not. Is this fair?

Tax evasion is probably highest in London and SE as well.

c/o CITYWIRE

Financial Times 06/11/10

-The gap between the performance of prime central London and the mainstream housing market is set to widen further in the next few years as the division between borrowers with equity and those without becomes a permanent feature of the market, agents say.

-House prices in the north of England are expected to rise far less than those in London and the south-east in the next few years, Savills has forecast.

The above says it all. Why should taxpayers through benefits help subsidise these increases any longer?

Rents in London and South East are the benefits problem NOT elsewhere.

Anonymous 3 - if you google national statistics I'm sure you will find figures that confirm that London and the SE contribute most in all forms of taxation - remember big bonuses and salaries imply big taxes and also there is a big working population in London and the SE. From other people's comments on-line (using Rightmove for example) there seems to be property available in London and the SE for people to rent under the cap the government is imposing, but maybe not in Eaton Square.

As to seaside towns - there was a period when lots of former holiday lodging house were empty because their former clients were going on package deal holidays - the councils advertised in areas of high unemployment for people to 'collect their benefits by the seaside' - I am aware of this happening in Brighton/Hove and Boscombe (Bournemouth) and that it brought a change in voting patterns and a big increase in social problems.

I need to plant my tulips so I'm afraid if you want more info you will have to do your own research.

Ines

London and SE might contribute more in terms of amount of Taxation, because of higher earning and incomes, but not their fair share.

That is another problem that should be addressed by the Coalition.

Anonymous 3

How would you calculate a 'fair share'?

Ines

Like Vodaphone paying their TWO BILLION which was waived.

I had a look at the internet to see what you were writing about - but I don't see that a company like Vodafone's tax affairs can be particularly linked to 'tax payers in the South East paying their fair share'. Tax payers, that is individuals, in the SE pay the largest amount of income tax, inheritance tax, VAT etc in the country and receive much less back - they are forever trying to close our hospitals, we have only 2 miles of motorway in the whole of Sussex, and council tax is ridiculous.

It seems to me that Vodafone is a big employer all round the country and brings in a lot of taxable revenue both here and abroad. It also seems that what is being said on the internet - that Vodafone has paid only £1billion instead of £2 billion tax - is based on rumour rather than fact.

Ines

Do not know where you get your figures to show that London and SE pay the largest tax in the country and receive the much less back. Even if that was the case you would expect the more affluent to receive less.

London and SE is not a separate country from the UK, so it cannot have all its taxation limited strictly to its boundaries. Pauper England outside of London and SE is still part of the UK.

As regards London and SE tax payers I am referring to corporate bodies as well as individuals.

The let off, of Vodaphone was widely reported in the media, eg The Guardian, and even if it is only one billion it would have been a significant reduction to this year's cuts. Why no transparency over the matter.

Would any of us expect to be let off by HMRC for half the due amount, even if we were an employer?

Some problems on taxation have been raised by Lorna Burke in the past, for example, please read about the issues.

As regards forever more trying to close our hospitals, I respectfully suggest you find out what is happening in the rest or the country. Wait for the current round of cuts to bite.

If you think you are badly of in Sussex, try living in Liverpool for a short while, where one third of households do not have any working person of normal working age.

Council Tax was made more equitable after the fall of Mrs Thatcher. What else do you propose? You are obviously suffering from the high prices of properties in London and SE, another reason for bringing them down.

So much for taxation, but we appear to have veered off at a tangent to Housing Benefits, which are highest in London and SE, because of highest prices and rents in London and SE, something urgently should be done there as opposed to anywhere else to limit them. Figures around £25000 twenty five thousand pounds/annum have been mentioned by Nick Clegg on TV. They are unreasonable there NOT elsewhere.

Ines

A small addendum

There is an article in to-day's Independent, titled

Third of Britons 'using savings as cost rise'

Thought you might find it interesting, especially the comment

People in London were most likely to have withdrawn money from a savings account to cover the cost of living during the period, at 51%, compared to just 29% of people in the North West.

Wait for the current bubble in commodity prices to advance, and food prices to increase, coupled with cuts. Times will be interesting indeed.

London has all the glamour and excitrement in abundance, particularly for the young. Thats why half the nWorld wants to be there, London's great popularity is the cause of these housing problems. When I started work there was nothing to rent, Coucils would laugh at you unless you had 6 kids. We were all driven to the outer suburbs, ethnically cleansed financially excluded ,forced to commute. 37% of all property in London is owned by people from overseas.. So what's changed? They can all go to Scotland for all I care., but I doubt they will!

London has all the glamour and excitrement in abundance, particularly for the young. Thats why half the nWorld wants to be there, London's great popularity is the cause of these housing problems. When I started work there was nothing to rent, Coucils would laugh at you unless you had 6 kids. We were all driven to the outer suburbs, ethnically cleansed financially excluded ,forced to commute. 37% of all property in London is owned by people from overseas.. So what's changed? They can all go to Scotland for all I care., but I doubt they will!

London and SE is the problem, with its waste such as The Millenium Stadium, where brickies and plumbers etc could earn £200/hour, exorbitant salaries and bonuses, sky high property prices and rents.

Jon Gallagher please note.