Housing support cuts cause outrage
- Published: Tuesday 01 December, 2020
- By: Commercial Trust
Landlords are outraged following Chancellor Rishi Sunak’s spending review announcement, which intends to cut housing support allowances.
The spending review, which was announced on the 25th of November in the House of Commons, highlighted how the Chancellor plans to reduce the amount of benefits tenants can claim to pay their rent.
A report released by the Office for Budget Responsibility, illustrates how the current Local Housing Allowance will be frozen in cash terms, in the subsequent year.
Consequently, the rate will decrease, meaning it will fall lower than the existing level.
The rate had previously been agreed in April and intended to help individuals in the lowest 30 percent of rents within any region.
Additionally, it aimed to support those renters who have endured significant decreases in their income, due to the pandemic.
Decreases in the existing rate will therefore pose difficulties, for those individuals who are reliant on it, to pay their rent.
Thus, these cuts will impact a vast number of renters and subsequently landlords.
Ben Beadle, the chief executive of the National Residential Landlords Association, responds to the news:
“Many renters and landlords are struggling with the consequence of rent arrears through no fault of their own yet the Government is failing to take the action needed to address this.
“Whilst the Chancellor has spoken about the need to support those who find themselves homeless, it would be much better to provide the funds needed to sustain tenancies in the first place.”
These sentiments demonstrate how many believe the government are not effectively tackling issues in the private rental industry.
Negative Implications of housing support cuts
In the midst of the pandemic, many landlords have accommodated and supported struggling tenants wherever they can, despite experiencing their own problems.
The cuts to housing support allowances is therefore a big disappointment for many landlords and may actually inflict more damage than it solves.
By reducing the amount of benefits tenants can claim, it may result in renters being unable to pay their costs, and thus landlords are at risk of accumulating higher levels of rent arrears.
Many landlords may however need this source of income to cover their own expenses and support their families.
The financial implications these cuts could have on landlords is therefore a concern.
To reduce these potential negative consequences, many believe it is imperative for the government to consider introducing additional financial support.
This is emphasized in further statements made by the National Residential Landlords Association who states:
“Given that most landlords are individuals and not property tycoons it will become increasingly difficult to keep affected tenancies going without adequate financial support to pay off rent arrears.”
It is therefore evident that many feel the government need to implement further measures to support the private rental industry at this time.
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.