‘Rents will fall and no-one will be made homeless’. So what happened, IDS?

Government Ministers have consistently argued that the changes in local housing allowance would lead to reduced rents in the private rented sector and would not lead to more homelessness.

Labour MP Karen Buck spoke at the launch of the NHF’s Home Truths report this morning, and writes exclusively for Red Brick below.

Guest post by Karen Buck MP, Labour MP for Westminster North

A year ago, Iain Duncan Smith said in the House of Commons debate on Housing Benefit:

“The purpose of these (HB) changes is to give a real impetus to getting the rents down to make affordable housing more available in some areas…… Through the emergency Budget and spending review, we proposed a set of housing benefit reforms designed to bring back under control a system that has been out of control. I accept that the responsibility of Government is always to get the balance right as we protect, incentivise, and ensure fairness in the system. Critically, for housing, that means getting the rents down….. There should be no need, with the discretionary allowance, for people to be made homeless. That is just the nonsense with which Labour Members want to scare everybody.”

One year on, we now know that the mean rent increase in London was around 12%.

We are facing an unprecedented crisis of supply and affordability. This has not all occurred since May 2010 – and some of the present problems have roots in the decision to
switch subsidy from ‘bricks and mortar’ to personal subsidy three decades ago. Still, recent developments have intensified the problem acutely.

Over the last year, homelessness has risen sharply, reversing a fairly steady medium term decline. The recent pattern by which homelessness/temporary accommodation has been diverted via the prevention and relief of homelessness strategy is faltering, because families are reluctant to abandon future security as the PRS becomes increasingly unaffordable. (Meanwhile, there are over 100,000 households to whom local council accepted homelessness duties but then diverted them into the private sector who will be
at risk of re-presenting as rents rise and benefits fall).

The central issue remains one of the supply of affordable homes, especially for rent, but whilst we are seeing the final wave of new supply coming through as a result of the Labour government’s investment, the future looks less hopeful because of the Orwellian ‘affordable rent’ model and housing benefit cuts.

‘Affordable rents’ as the means of filling the grant gap mean not just places like Westminster become unaffordable – an ‘affordable rent’ set at 65% of market rents would require a household income of £65k to cover the cost without benefit – but so do poorer
places like Haringey and Newham. In Haringey, a rent set at 80% of local market rents would require a household income of £31k for a 1 bed flat, and in Newham a 2 bed flat would require a household income of £27k. This at a time when the median income for social housing tenants is £12k.

The Household Benefit Cap and Housing Benefit cuts, meanwhile, are estimated in a recent report by London Councils to leave 133,000 households unable to pay their current rents.

Even if this proves to be an over-estimate, staggering numbers of households face a dramatic shortfall in their income and are at risk of upheaval and homelessness as private rents continue to soar. Boroughs with lower housing costs can anticipate a sharp increase in numbers of incomers, many with high service and support needs.

It is worth noting that unemployment, the freeze in real wages and rising housing costs have already contributed to a rise in the number of private sector Housing Benefit
claimants, especially in the suburbs- the London Borough of Redbridge, which includes part of the constituency of the Secretary of State for Work and Pensions, saw a 65% increase in Local Housing Allowance claims in a little over a year, the largest increase in the country. Some of the areas facing the biggest cost pressures are not the Knightsbridge’s and Mayfair’s of popular myth, but places like Hillingdon and Croydon, whilst Newham will be amongst the places worst hit by the overall Benefit Cap.

Supply may be the solution over the medium and longer term, but in the very short term we need DCLG and DWP to sort out their differences and develop an integrated approach
to housing need and homelessness before they escalate.

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5 Responses to ‘Rents will fall and no-one will be made homeless’. So what happened, IDS?

  1. Pingback: Cameron makes it up | Red Brick

  2. Anonymous #1 says:

    As a landlord, I have not increased the rents in several years. I do this, because once a tenant is in there, I don’t want them to move and this is good for me so I avoid re-letting costs and the cost of redecoration, which occurs between tenancies. But my tenants, are not the sort to go to Shelter and say “Oh my landlord is great, he has not increased the rent in 6 years and looks after us”. Campagning groups like Shelter are interested in the shock and horror propoganda and the reputation of ‘good landlords’ is being damaged along side their campaigns to attack rogue landlords.

    However, there appears to be no way for good landlords, to earn ‘credits’…. I say this because I hear a lot of nasty words such as landlords are this and that… they exploit tenants. So how do you recognise the good landlords?

    • Bernard Crofton says:

      I am sure you are a reasonable person to have as a landlord. But my question to you would be: are you planning to REDUCE the rents to your tenants, as the housing benefits they receive go down?

      I accept that “no” is a perfecly reasonable response. however, when your tenants have to move, you will get those reletting costs you want to avoid. I imagine you would be wanting to put the rent up for the next tenant, to recoup those costs. If you are to make what most people would regard as a reasonable return on your investment. However, the Minister’s theory is that as they reduce benefits, rents will have to come down. Please read again the quote from Ian Duncan Smith above : he twice used the phrase “getting the rents down”. I would be surprised if this makes you think the government values good landlords, or indeed makes you positive about being a landlord at all.

      I do hope you come back to this site and respond, because I think you would not have posted your first comment if you were not genuine.

  3. DaftAida says:

    Untangling the double-think, quakspeak of affordable housing. It is clearly working on completely unnafordable housing for those intended to benefit from the existing affordable housing in place. I was very suprised to realise how much my landlord charges for ‘affordable’ rents; thank you for breaking it down into earnings required to cover such unlawful and unecessary phasing out of the public provison of housing which we, previous and subsequent generations have invested in. This investment has been squandered and profits to be made from affordable housing do not include those in actual need.

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