Newham Council and Social Cleansing
Newham Council is looking into sending families to other parts of the country because they say they cannot house them in the borough. Private Rented Sector expert David Lawrenson says the issue would not arise if the government made Local Housing Allowance work better. But Newham may make matters worse locally because of its proposed local licensing scheme for all landlords.
The Local Housing Allowance (LHA) rate is set at the 30% percentile of local rents, so 3 out of 10 properties in any area should, by definition, be available.
And sure enough, a quick look at Rightmove and we can see lots of properties are on the market to let in places like Newham at cheap rents.
But the real issue is that they are not readily available to LHA dependent applicants. This fact and the reasons for it appear to have been missed by the Mayor of Newham, Sir Robin Wales and the London Borough of Newham.
The reasons why landlords are often reluctant to let to tenants who are on LHA are many, varied and are more complex than has been reported in the main media…..
- When letting to tenants who depend on LHA, assuming the LHA can be paid direct to landlord which is not always the case following Labour’s 2008 changes to the system – the payments are always made in arrears, unlike non-LHA lets where they are always paid in advance. This is obviously worse for the cash flow of landlords.
- LHA tenants don’t usually have a deposit they can hand over to the landlord to protect. And even where local govt can help with a deposit, as is the case in Newham, the landlords often tell us that the deposit schemes are cumbersome, slow to administer and claim against in the event of damages caused by tenants.
- Buildings and contents insurance premiums are often higher where a landlord lets to people dependent on LHA. Sometimes insurance is refused altogether.
- Some buy to let mortgage loan terms and conditions do not allow landlords to let to people on benefits such as LHA.
- LHA admin is slow, cumbersome and involves lots of form filling. Payments can start and stop without notice and the council can even try to claw back from the landlord past payments, if it later emerged that the tenant was claiming fraudulently.
- Some landlords (a minority) think that LHA tenants are more likely to be non-payers or to not look after properties properly.
For all these reasons private landlords increasingly reject letting to “LHA tenants”.
To make matters worse, Newham local authority may have scared off potential landlords by their proposed landlord licensing scheme which is predicated on the belief that licensing ALL landlords will somehow help stop antisocial behaviour by a minority of tenants.
But at LettingFocus.com we have never met a decent landlord who actually wants to keep an antisocial tenant.
Instead of licensing all landlords, we think boroughs would achieve more by using their existing powers to shut down the minority of rogue landlords and prosecuting antisocial tenants rather than set up a new scheme for all good landlords the costs of which will be passed to tenants and which the rogue landlords will simply ignore anyway.
We also say that the central government must look again at how LHA works. Reinstating giving all tenants the option to have LHA paid direct to landlords would be a good place to start.
Extension of a Newham style licensing scheme for all landlords in London as proposed by some of London’s mayoral candidates is an expensive way to try to solve the problems caused by rogue landlords or antisocial tenants. Lobbying for far harsher penalties for landlords who break existing laws would be far better.
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