Housing benefit changes to damage private landlords
January 3, 2012
In recent months there have been many warnings that changes to housing benefit entitlement would lead to an increase in homelessness. It is not just the ‘usual suspects’ (Shelter, Crisis, HomelessLink, BHT) giving these warnings. Evidence collated by Templeton LPA, a specialist practice of LPA Receivers*, shows that the number of court orders to evict tenants is up by 11%.
In the quarter from October to December 2011, 24,966 tenants in England and Wales faced eviction notices – up 11% from 22,558 in the same quarter a year ago. In the same quarter of 2011, there were nearly 11,400 tenants over two months in arrears – up 18% from the same period of 2010. At the end of 2011 there were 78,970 tenants in England and Wales in severe arrears.
I have consistently warned that the changes in housing benefit entitlement, currently being introduced, will see a significant increase in rent arrears and, consequently, homelessness.
Having proceeded in spite of warnings and evidence of increasing homelessness, the government might yet be persuaded to reconsider its policies because of the impact on private sector landlords.
There are 26,300 buy-to-let mortgages in severe arrears, more than five times as many compared with 2006.
Paul Jardine, director and receiver at Templeton LPA, said: “A growing minority of renters are falling deeper and deeper into payment difficulties, and the number of severe arrears cases is rising.” He said buy-to-let mortgage arrears are yet to feel the impact of growing severe tenant arrears and evictions, but this would change this year.
In areas like Brighton and Hove, where the private rented sector accounts for 25% of all housing, it is the most important sector for addressing housing need. Undermining confidence in the private rented sector would be catastrophic.
*Law of Property Act Receivers act for banks and private lenders who have secured their loans by a Legal Charge (mortgage) on a property. Under the terms of the Legal Charge the lender can appoint a Receiver to deal with a property when the terms of the mortgage are not being met – usually when repayments and interest are not being paid.
