Letting agents are urging the government to boost Local Housing Allowance (LHA) each year to keep pace with market rents.
Giving evidence to the DWP Commons Committee hearing on UK benefit levels, Timothy Douglas, Propertymark’s head of policy and campaigns, said it must increase housing options for the most vulnerable by setting LHA at the 30th percentile, if not the 50th.
LHA rates are based on private market rents being paid by tenants in the area within which a person might reasonably be expected to live, and the local allowance is based on the 30th percentile on a list of rents in the area.
Capped
This is because housing benefits or universal credit payments are capped by LHA rates which were last updated in March 2020 to cover the rent for the cheapest 30% of properties in each local authority – in effect freezing them.
Benefits are not keeping up with rising rents, he told MPs, and further pressure has been put on the PRS because of low social housing stock, leading to vulnerable tenants being priced out of the market.
“The decision to phase out Mortgage Interest Relief and other unfavourable taxation policies is resulting in landlords facing unprecedented financial challenges,” said Douglas.
“If a decision not to implement a pro-growth taxation agenda for the private rented sector is not brought forward, it will be the most vulnerable tenants who are negatively impacted, many of whom are in receipt of benefits.”
Shortfall
Research by the Chartered Institute of Housing and Shelter found that fewer than one in five private rental properties in England were within LHA rates last year and that the average renter now faces a £151 monthly shortfall because it fails to cover their costs.
Earlier this year, the NRLA also criticised the government for its complacent attitude to the LHA freeze and its effect on both tenants and landlords.
Douglas also called for a change in rhetoric, and for policymakers to view private landlords and letting agents as part of the solution to resolve the housing crisis.
Look, houses are overpriced, injecting more money into the housing market is a short term ostrich fix. Too many landlords at low LTV buying up too many houses in a small stock means shifting smaller pockets from purchase to rent. You can’t invest money without risk and maybe that’s a lesson that landlords need to learn.
If they give more money, dss landlords will just put the rents up to get the money. It won’t improve the poor quality housing, it won’t make landlords who don’t want dss have them, it won’t magic more houses. But it will cost us tax payers.
If the government abolish services charges and abolish leasehold the savings the landlords will make will lower the rent to tennets.
How can getting rid of service charges help that’s the one thing maintaining property
I was shocked to see a shortfall of housing allowance for council properties. Councils have put rents up quite a bit to where a single person with no children only recieved 77 pounds a week housing allowance in the area i used to live but they will now have to top up their council rent by about 20+ pounds a week. Add the 35 percent council tax in Band A which is about 8 pounds. That would leave about 56 pounds out of their 84 pounds a week to live on for food and bills assuming they are over 35 as 35 and under only receive room rate which is something like 62 pounds a week.
If people don’t have mental health issues before claiming universal credit they soon will have because of lack of nutritious food that they can’t buy. You cant even get a scabby room for 77 pounds now either. So whether they have their own place or live in just a room they won’t have much left after rent top up. That’s for the over 35s. Under 35s it’s less as they are only entitled to room rate.
My friend who has no children was on universal credit the other year after loosing his job and he said they want you go go kill your self. That was before the cost of living went up.
Is it true that the disabled if under 35 can only claim room rate now ?
It seems a nonsense narrative. We are told the direction is a minimum baseline of two foot thick walls, everlasting tenancies, cat lady roulette, and council squads metering social justice. As of now, all that market rent gets you is the black granite effect worktop, yet all of this will be available for ca. 35% below the market rent? I don’t see it.