Changes to housing benefits – will that mean more babies?
Recent announced changes to Local Housing Allowance may have a dramatic effect on population growth and has been underestimated by the government.
From January 2012 new claimants under the age of 35years old will no longer be entitled to the one bed self-contained rate (ie one bed flat rate which on my patch is £90 per week) they will only be entitled to a shared rated of £56pw. So what does this mean?
To landlords and owners of one bed apartments – it means you need to get your property filled and keep it filled with the same tenant until the government se
es sense otherwise your rent will drop dramatically. Assuming that you bought the property based on the £90 rate and that allowed for a profit margin of say £150 per month – then the drop in rates will see you profit fall to £2.67 per month.
What does it mean to tenants? More people forced into shared accommodation.
So, on the upside, any landlord with a house could convert to an HMO for LHA tenants and make an increased profit as a simple 3 bed house with 3 sharers would be worth more than renting to a single family.
Is this a ploy by the government to manage the housing shortage? Let’s make all the unemployed people live together?
I was so shocked at the short sightedness of this policy.
Who in their right mind would choose to live with strangers in an LHA tenanted HMO (House of Multiple Occupancy) – I can hear lots of landlords bristling because their properties that are let to benefit tenants are well maintained – but what about those properties that are not, and they sadly are numerous.
Almost every property I look to buy whether a house or an HMO at the lower end of the market (where the cashflow is) needs maintenance and repairs. If there is no profit in letting the landlords will furt
her be driven to making tough choices whether to pay the mortgage or the repairs and housing stock will decline in quality.
The alternative of course, especially if you are female is to breed! I am sorry to be so blunt, but the reality is our system already encourages young women to have children and then pays you for them! If benefit rates are cut – as the proposal suggest- then more young women will see the choice of having a child as a pathway to getting a sole occupancy property. A property that only they live in and that is potentially better maintained – is this what we want?
Again we seem to have missed the point. If the desire is to reduce the benefit burden – then increase the motivation and benefit of working. Both through education, business growth (that’s skills and employment) and also through cultural change – a society that sees benefits as a necessity and emergency measures not a given right!
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Powerful reply Marie and totally agree – we need more sense and thought – more people in touch with reality when making these decisions – thanks for commenting
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Hi Vicki
Interesting post. I think the 35 age limit is too high.
I have HMO’s and have guys who are divorced and simply trying to get back on their feet, and while they are prepared to live in a room for a while, its simply not suitable for when they have their kids.
It isn’t fair on the dad, the kids, or even the other tenants. And then if the wife is being a ‘mare, she then uses this as an angle to stop them seeing the kids.
It’s a crazy world, when a 16 year old who has never worked but managed to produce some kids can live in a nice family house, whilst someone who once lived in a house like that, and is trying to make a clean start after a divorce or whatever can’t get enough money to sort a suitable place out!
The other argument is that it steers landlords to making houses into HMO’s, but local councils are complaining about Ghetto streets, with individuals not families, and no sense of community….
Hi Naj – Thank you for your comment and reading my blog. I can assure you as a woman – I still wonder about this !! Male or female – our benefit system does not encourage self reliance and has become a “nanny state approach”. It is certainly a dilemma as an investor to be benfitting and facilitating the issue? Until we can change government policy I am not sure what the solution is ….
Hi Vicki,
Interesting article. I have to agree with you in terms of the short-sightedness of the policy – it does indeed seem that the Government want to stick all of the unemployed HB people together! Absurd.
What you write about regarding our system encouraging mums to live on benefits, I think about a lot to be honest. Just recently, I let out a property to a young person no older than 23 for a four bed property. I charge £660. She has (I think) four kids and another on the way. As far as i’m concerned I’m happy because she seems to be a long term tenant and also consistently keeps up with the rent. But wheres the encouragement to go and achieve success off your own back?
I’m starting to think, maybe I should have opted to be a Woman
…