Private Tenants Beware – Coalition plans to shaft you

Some people just don’t do numbers.  I am that annoying sod that does see patterns in numbers and can still do long-division in my head. It’s a nice skill to have but can work against you as I should know.

To explain – look at Chart 1 below:

Chart 1

The chart shows what percentage of the market rent that LHA pays now at 66.14%.  National average market rent now (2011 above meaning 2011/12 financial years) is £168.86 per week (LTS) and national average LHA actually in payment is £111.69.

[LHA is the main form of Housing Benefit paid to private tenants]

The chart also shows what the government plan to happen to it until 2020 as they expect private market rent to rise by 4% each year and LHA to rise by 2% each year with a zero increase next financial year (2012/3).

By the end of this Parliament in financial year 2015/16 LHA will reduce to 60.06% of the average private rent and by 2020 will reduce to just 54.50% of market rent.

The chart above can be seen by all as to what it means that private tenants will have to make-up more of their rent each week through other sources whether that is savings, earnings or benefits.  The graphical nature of the chart takes away the number blindness or tedium some find in looking at numbers.

So what does this means in money terms for the private tenant?

Chart 2 below puts a monetary figure on this average

Chart 2

As we can see the amount of money the average private tenant will have to pay toward their rent rises starkly in the government’s plans.

Currently it is £57.17 per week on average.

By 2015 and the end of this Parliament it will be £78.90 per week.

By 2020 it will rise to £109.35 per week.

Forgive me reader if this appears patronising, it’s not meant to be.  What it does is explained the apparently small difference between the government plan to limit LHA rises to 2% while expecting the private market rent to rise by 4% each year.

On Monday I brought to everyone’s attention that LHA will be frozen next year and a bit of a scoop and the blog views were 20 times more in one day that I expect and been used to in a week.  Yesterday I published this detail above of the 4% rise in rent and only 2% for the LHA and that it will move to an annual rate set in April each year.  This had never been reported before either and was sourced from an impact assessment the DWP issued in October 2011.  I naturally anticipated a similar number of blog views.  Yet I published it in an unacceptable way if my use of the blog viewing figures is a benchmark and I forgot the first rule of a consultant and the first rule of any communication – to get that message across in an accessible way.

In summary it was my communication error.

I commented on both the above blogs in some detail what this will mean and it has very significant negative consequences for the housing sector.

  1. Private landlords will not accommodate new applicants who are on benefit
  2. Private landlords will evict existing tenants on benefits as arrears will grow
  3. Homelessness will rise.
  4. Homeless hostels and other temporary accommodation costs the HB bill much more than private rent so HB bill will rise
  5. More homeless families will be moved to other areas and vulnerable adults and children will suffer because of this
  6. Homeless hostels will have to turn more people away
  7. Homeless hostels will be threatened financially by this
  8. Domestic violence refuges will have to turn more people away
  9. Domestic Violence / Abuse refuges will be threatened financially
  10. Massive demands will be placed on social housing which already has chronic shortages

The above are just a few of the direct consequences of this government policy.

Finally and for the occasional reader another mistake I made is assuming most people are aware that private tenants have to make-up a significant proportion of their rent.  The above figures dispel that and reveal just how much on average this is.

The housing professional reader, many of whom dont realise the extent of this tenant make-up, will look at the percentages above and wonder whether the Coalition’s plans for so-called “Affordable Homes” with rents set at up to 80% of the market rent are really ‘affordable’ as they will mean higher levels of HB being paid than is currently paid by LHA for the private tenant.  Many previous blogs from September 2011 onwards I have issued contain this point on ‘affordable rent.’

Further note that the DWP figures I revealed yesterday (in the poorly accessible form) also reported that DWP expect LHA claimants numbers to rise by 5% by 2013 – the impact on the overall HB bill will be significant and increase by a further £370m or so per year

For the regular reader you will notice the blog page has changed style – because this numerate so and so couldnt work out how to do it in the original wordpress one!

To all readers who have been very kind in their comments emailed to me and those who have retweeted my numerous blogs thank you as always

Joe

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