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  • Buy-to-Let

    "Poverty increasing in the PRS" claims new report

    News from Inside Housing

    The number of people living in poverty in London’s social housing has decreased by 340,000 over the last ten years, a new report has revealed.

    However, this compares to a 460,000 rise in people living in poverty in the private rented sector, which now houses the majority of those in poverty in the capital.

    Inner London has half the level of owner occupation, and double the level of rental, both in private and social the new report London’s Poverty Profile shows.

    At the start of the 2000s over half of those in poverty in London, around a million people, lived in the social rented sector, the report said.

    Now 830,000 are found in PRS compared to 700,000 in the social rented sector and 610,000 in owner occupation.

    This means poverty should no longer be seen as confined to social housing, with ‘substantial’ implications for tackling poverty, the report from the New Policy Institute says.

    The report also found significant issues with cost and overcrowding, showing the cheapest homes in London were double that of those in the rest of England.

    Overcrowding rose from six per cent to eight per cent, and is now four times more common in PRS and six times more common in socially rented homes.

    Last year, over 11,000 households were placed in temporary accommodation outside the borough they were living in, the report said. Around 700 were placed outside London altogether.

    Landlord repossessions were also higher in the capital than anywhere else in the UK.

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    How does someone living in poverty live in the PRS? Are they LHA tenants? Or is the definition of poverty set in a way that people who are credit worthy PRS tenants end up below some poverty level?

    If a tenant can afford to pay the rent why call it poverty?

    If they are LHA tenants, does it really matter who owns the building? They can not afford to pay their own way and they are receiving a subsidy for housing. Very similar to the past other than the ownership of the building.
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    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.

    EHS 2017 says around 25% of PRS tenants are LHA claimants - effectively an overspill of people who in a former era would have been in SRS claiming HB.

    Needs based tenancy allocation in SRS began over 40 yrs ago - with claimants rising from a mere 10% in 1980 to current 75%.

    Noteworthy is that DWP say only 23% of the 4.7 million HB/LHA claimants are in working households - so a good many have no core need to be living in expensive locations such as London/SE etc.

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    It is interesting to up-date this topic 5 years on ...

    1.3 million children living in poverty in private rented sector, says NHF

    In a new report published today, the trade body said that is an increase of 537,325 from 2008 – a 69% rise – with a shortage of social housing helping drive the surge.

    The NHF claimed that 242,753 of the children currently affected would not be in poverty if they lived in social housing and that another 500,000 would be better off.

    Social rents are typically around half of market rent, meaning that poor households in private rented homes would be £3,172 a year better off on average – which would also save the government an annual £1.8bn in housing benefit.

    Nearly half (46%) of all children living in England’s private rented sector are in poverty, despite 71% of their families having jobs, researchers said.

    Full/source article 

    ​See - Social landlords are the real "rent thieves"

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    Nearly half (46%) of all children living in England’s private rented sector are in poverty, despite 71% of their families having jobs,

    If we take the PRS as the sample rather than the cause this tells us that:

    • 33% of employees are not earning enough to be above the poverty line - that's an employment issue
    • 46% of parents are unable or unwilling to adequately support their family - that's an education and social issue, and quite a big one!
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    A good teacher must know the rules; a good pupil, the exceptions.

    Martin H. Fischer

    This is simply the result of various Governments failing to address the social housing needs of its population.

    Anyone with a ounce of common sense would have predicted this crisis years ago. Rather than sit in the cheap bar at Westminster Palace its about time they got  their B --s and sorted out this problem rather than support the banks that have made billions on the cheap money they were offered.

    If you and I could have borrowed at .25% . and invested in bonds at 4% we would all be rich. 

    It was easy money for the banks and no one saw it coming. Well it was given to the banks to lend out did the government really think that was what they were doing- of course not..

    Billions of those profits could have been taken back and given to local authorities to build social housing and improve their housing stock.

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    "Social rents are typically around half of market rent" - Love to know where this stat came from?

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    Save Money on All of Your Utilities Attract Prospects to Your MLM Business

    And we will be called the greedy buggers

    the truth is all our costs are riseing and there has been an LHA freeze for years

    osbourne and his plans will not help this sector

    level playing field my hat

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    Responding to today’s report from the National Housing Federation on poverty in the private rented sector, Chris Town, Vice Chair of the Residential Landlords Association said:

    “The biggest driver of poverty in the private rented sector remains the Government’s freeze on Local Housing Allowance rates. Support for housing costs is simply failing to keep up with the realities of rented housing and we call on the Government to use its spending review to drop the freeze.

    “It is though disappointing that today’s report failed to note that the official data shows that the proportion of income spent on private sector rents is falling compared to the social sector where it is increasingly. Data also shows that over the last year private sector rents fell in real terms.

    “In the end, the best way to ensure rents are affordable is to boost the supply of homes to rent alongside all other tenures. This means the Government adopting a positive, pro-growth tax regime that supports and encourages the majority of good landlords to provide them.”

    The English Housing Survey shows that between 2010-11 and 2017-18, the proportion of household income (including housing benefit) that private sector tenants spent on their rent decreased from 35 per cent to 33 per cent. In the same period the proportion of household income (including housing benefit) that social renters spent increased from 27 per cent to 28 per cent.

    The Office for National Statistics has reported that in the year to December 2018, private sector rents paid by tenants in the UK rose by 1 per cent, well below inflation.

    ​A report for the RLA by Manchester Metropolitan University has noted that Local Housing Allowance rates are the main driver of tenancy failures in the private rented sector.

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    Longer term perspective on Social Rents - since 1979 on long term average they rose by 8% cagr (doubling every 9 yrs)

    That was a 3% cagr faster increase than average UK wage growth in same interval.

    Indeed had Social Rents tracked wage growth the average rent today would be just 1/3rd of actual rent and HB bill in SRS over £10 billion pa lower.

    With HB claimants in SRS going from 10% in 1980 to 75% today there was little tenant opposition to those rent increases - plus of course the only other alternative was to move to PRS at even higher rents (ie post 1989 when ASTs came on stream). 

    No surprise that SRS gets 65% of all HB/LHA - largely due to needs based tenancy allocation.

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