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  • LHA/Universal Credit

    Housing benefit bill to hit £70bn by 2050

    See my post above - LHA bill for PRS is £9.3 billion pa - but HMRC collects £8 billion pa in taxes from PRS  - so net cost is then £1.3 billion pa.

    That translates to c.£ 18 weekly net for PRS to house the 1.5 million LHA claimants.

    Contrast that with SRS getting some £17 billion plus in HB pa but paying no tax thereon - hence average cost of housing the 3.2 million HB claimants is then c.£104 weekly.

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    But the tax is not being collected from the same landlords receiving the housing benefit so much of that tax would still be collected without the housing benefit being paid in the PRS.

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    Agreed - but the cost to Taxpayer of subsidising PRS is tiny compared to subsidising existing SRS - and miniscule compared to subsidy cost of an even bigger SRS if we build millions of new Council homes - with tenancies given primarily to the destitute as we have since 1977

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    As I flagged in my opening post above - Taxpayers either put in massive Capital Subsidy for new build Social Homes - or we continue as we have since the 1980s by subsidising rents via HB.

    Tory soundbite from 1980s was "let HB take the strain",

    You also need to remember that core ethos of SRS in early post war decades - was new Council homes aimed primarily at workers paying own rents to repay build costs (which they did)

    The evidence for workers paying own rents is that HB claimants in 1980 were just 10% in SRS.

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    English Housing Survey flags that only 35% of HB/LHA total goes to PRS - noting that LHA has been frozen for 6.5 yrs

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    The methodology of the current benefit system means that however much the min wage is increased (within bounds of reason) it is not likely to put more cash in the pockets of existing benefit claimant cohort.

    Reason being - the 65% benefit clawback from extra net earnings - so above the Applicable Amount of c.£73 weekly - an extra £100 say in earnings nets £68 - and 65% of that £68 is taken away from benefits - leaving just £23.80 as extra wages - but from that also needs to be deducted commute/pension/child care/work lunches etc etc - so many such claimants end up with less money than before returning to work or before increasing hrs etc.

    More new social housing - whilst we retain the 1977 change to needs based tenancy allocation - will simply mean a ballooning HB bill for SRS.

    Many new SRS tenants would be taken from the 1.5 million LHA claimants in PRS I imagine. So the balance would shift HB even further away from PRS.

    Rent controls in PRS are a possibility - but unlikely to cull LHA claimants (nor their LHA cost) as in SE especially LHA is so far behind actual rents.



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    The entire benefit systems needs to be reviewed, what you describe encourages people to work part time knowing their income will be topped up.  I am also firmly of the view that the minimum wage needs to be increased to a more realistic level.

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    The first and perhaps most important point is the blatant 'shock horror politics' of the £70 billion figure.

    The current £24bn housing benefit bill (HB/LHA and UC equivalents) if inflated at [CPI+1%] would see it increase to £74bn by 2050 - and the current proposal from the Government for council and HA rents is to increase them by CPI+1% from 2020.  Hence the current policy from the Tories is for HB to be £70bn+ by 2050 and s the CSJ which is a Tory think tank set up by Iain Duncan Smith is making shock horror comments about Tory policy ... and how coincidental this is released just before the latest budget!!

    I suspect - and Monday this week will reveal - that this 'shock horror' announcement is a premise for some further cuts and constraints to housing benefit in the budget.  Yet as the Tories have announced their interion to allow CPI+1% increases to HB for social (ahem!) landlords then this leaves ony PRS housing benefit as an option for them to constrain!

    We will see on Monday but let me leave you with the facts from 2010 to 2017 (the latest details we have):

    The Yellow line is the average HB increase of 22% and thus way behind social housing rent increases

    The average LHA increase for the PRS in this period was 1.4% - So the Tories have been regulating the PRS with housing benefit rates while at the same time letting it run riot for council and HA landlords!!


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