Letter to Grant Shapps on Housing Benefit Plus Making Accommodation Available in the Private Rented Sector with Private Landlords

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In September 2010 we sent the following letter to all London Authorities Heads of Housing, to Housing Minister Grant Shapps and to Sir Steve Bullock who is Exec Chair of Housing at the Mayors Office.

“The coming changes to Housing Benefit will have a big impact on landlords and local authorities in charge of housing, especially in London. Preparing for this should be an urgent requirement for all boroughs.

LettingFocus has done research which shows that local authorities could save hundreds of thousands of pounds each year by simply adjusting existing processes and improving the ways in which they manage their relationships with the landlords in the private rented sector.

The challenges posed by the Housing Benefit rate changes are many, but are all interlinked with meeting the needs of both tenants and private landlords whilst delivering the most cost effective and efficient service.

We suggest the following solutions:

Examples of possible solutions:

1. Landlord recruitment  and supply – Some localised “letting agency model solutions” are good but some that we have seen, come at a very high cost compared to solutions using existing lettings portals and may also introduce new “hand offs” into the process, thus complicating it unnecessarily. We review these schemes and suggest alternatives.
2. Landlord incentivisation – Private landlords want to minimise their time, cost and risk in their letting business. They also want low void periods (which some tenants on Housing Benefit can provide) and rent paid on time, each time. If processing of payments is efficient, we question whether other cash incentives, currently paid out by local authorities are either needed or are cost effective.
3. Efficient systems for rent payment backed up with support – If the authorities make late or incorrect payments they will lose private landlords. But if mistakes are made, they should have in place the right support processes, built around landlord needs to put them right.
4. Tenant referencing – We have seen examples of local authorities paying private companies for expensive solutions which complicate the process or introduce additional “hand offs”. Simple low cost solutions are available and additional data could be provided, if required, in house by the local authority.
5. Damage and Rent Guarantees – Using knowledge of tenants, local authorities should “self insure” and / or use lower cost external solutions thus saving the premiums often paid to external providers as part of the landlord recruitment process.
6. Even after the rate changes, many private rented sector landlords may still be happy to let to Housing Benefit dependent tenants (though there is undoubtedly an issue in Westminster and parts of some other central boroughs). A recent survey done by London Councils claims that 82,000 tenants on Housing Benefit and with private landlords in London will be evicted as a result of the changes to Housing Benefit. We received one of these surveys. In our opinion the structure of the survey made the likely number of evictions much higher than we think it will be. As only 270 landlords responded we also question the statistical validity. (As part of our work we suggest appropriately designed surveys that will tease out private landlords true intentions post the changes)
7. Private Rented Sector Access Schemes should be placed at the heart of the local authority’s housing strategy – At the moment, strategies for the PRS are very low down on most local authorities strategy papers. This must change.

Different local authorities face different challenges. The more expensive central London boroughs may need to look to outer boroughs to find housing solutions for those priced out of central areas by the new caps. Outer London boroughs need to defend their private rented sector supply from attrition by other boroughs and may also see rents rising due to more demand.

All local authorities will have an even greater need to make sure Housing Benefit / Local Housing Allowance processing systems are efficient, especially at making payments direct to private landlords if their Housing Benefit dependent tenants default.”

At LettingFocus we help local authorities and housing associations to design and implement the types of low cost solutions that will help them house people in the private rented sector.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector and Landlord Information.

I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years. 25,000 copies sold.

Services to Businesses and the Public Sector

Primarily I am a consultant to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors in build to let and insurers – helping them with their landlord facing or buy to let product strategies, marketing and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing associations / local authorities find private landlords (private rented access schemes, local letting agency models etc.)

I also write for property websites and am regularly quoted by the media.

Services for Private Landlords

We also find a limited amount of time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor. We pride ourselves on giving independent unbiased Buy to Let Advice on a one-to-one mentoring / coaching basis or through our (very occasional) group seminars.

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