Local Housing Allowance Concessions Likely and Innovative Thinking Sought from Lenders

I hope you are not too bored by our coverage of the Housing Benefit story.

If you are an organisation or public body and are providing / selling services or products to the private rented sector, you should still be riveted because it has big implications for the whole market.

Even if you are a landlord who never lets to tenants on Housing Benefit, the changes that are coming will have a significant impact on all rent, except for in the very upper end of the private rented sector. So, we think it is worth covering.

Anyway, the Government continues to tinker with what has been proposed. Here is the latest:

Concessions on Housing Benefit / LHA Changes Expected

It looks likely that the Government will make further concessions in its cuts to Housing Benefit by delaying cuts for existing private sector claimants.

The caps to the amount of Local Housing Allowance (LHA) existing claimants can receive look like being delayed until “anniversaries of review” starting from January 2012.

However, from April 2011, Housing Benefit will still be capped for new claimants (The caps depend on property size and range from  £400 a week for 4 bed properties down to £250 a week for 1 bed properties.)

We expect to see some other concessions too, including possibly concessions for jobseeker’s allowance claimants who have a disability.

Coming soon is the report by the Department for Work and Pensions internal social security advisory committee which is due to be published at the same time as the statutory instruments are laid down. I expect the report may criticise the cuts. Should be interesting reading.

Once all the concessions are counted up and once the cost of the increased use of temporary accommodation has been added in (see 2 blogs ago for more on this) we wonder if the out-turn for savings from these big changes will be much to shout about.

Still, this is politics and it will keep some in the press happy that something has at least been done to try to tame the soaring cost of the Housing Benefit beast!

Local Government Grapples With the Changes

Local government officials that we meet in the course of our consulting work are doing an honourable job of grappling with the Housing Benefit changes. And it’s not an easy job.

To get new ideas they must constantly look over at what other boroughs do and how they go about accessing the private rented sector supply.

But with other boroughs also chasing the private rented sector supply too, they actually have to compete to some extent – so not the ideal environment for idea sharing!

Also, watching what others do can sometimes lessen the potential for innovative thinking. (With our understanding of the sector, how it’s structured and what landlords want, we do our best to help people break out of their paradigms.)

But there is some very clever thinking around Government too.

Picture This

Picture this – we have mortgage lenders repossessing properties. Lots of them!

The properties sit empty for ages while an estate agent tries half heartedly to sell them. (Fees for this work are low, so it isn’t top of an agent’s “To Do” or “To Sell” list at their Monday briefings.)

If they don’t sell via an agent, the property eventually goes to auction where it is often sold at below market value. And the properties sit empty all this time.

Meanwhile, the local councils are desperate for property.

Now, we know that mortgage lenders can act as “receivers of rent” so it would be nice if some kind of deal could be done where councils could use the repossessed property for temporary accommodation with the lender getting a gilt edged rental income.

Local and national government are predictably keen, but we would need some real innovative thinking from the mortgage lenders for this to happen.

I’ve said before that many lenders seem to lack the innovation of those involved in housing within Government so I’m not holding my breath that anything could happen here. I expect repossessed houses will continue to sit empty for ages and be sold off cheap.

School Closures – How You Know When You are Old

You know you are old when you have lived long enough to recall your school days and how they never shut schools then just because of a teensy bit of snow.

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.

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