Single Aspect Blog

Allied against Osborne’s housing benefit cuts

Boris Johnson, Simon Hughes and Karen Buck – allies against housing benefit cuts. Photo of Hughes by Keith Edkins

The public have a way of bringing common sense and experience to complex issues and I have great faith in the ability of Joe Public to explain things in straightforward terms that anyone can understand.  So it is with the housing benefit cuts and the hyperbole that has gone with it in recent days.  I was out last night and happened to glance through the Independent letters page, the first of which sums up for me the whole history of the problem in a few paragraphs.

Letters: Landlords and housing benefit

Benefit boom for landlords

Monday, 1 November 2010

It was Labour government policy to encourage everyone with spare cash to enter the “buy-to-let” market and become an amateur landlord.

This resulted in an inevitable pushing up of property prices throughout the United Kingdom, creating a property “boom” market that was only sustainable because desperate first-time buyers were offered mortgages of 125 per cent upwards on a property’s value.

Prices continued an upward surge for a decade, creating what is now accepted as a “housing crisis” that has made property unaffordable and left millions of home owners and potential home owners unable to buy, unable to sell and unable to move home.

In the meantime, private rents were rising in line with “market value” and it was public money that met the cost as more and more tenants became unable to meet their housing expenses.

Most private rented accommodation is “assured shorthold tenancy”, a contractual arrangement that gives the landlord the power to recover possession of the property at the end of a fixed period of tenancy, usually no longer than six months. The landlord can increase the rent if the tenant wants to extend the agreement; the tenant has no choice other than to apply for an increase to their housing benefit. This public money goes straight into the pockets of the private landlords and does not benefit the tenants other than providing a stay against homelessness.

The stark fact is that housing benefit has been out of control for years and this is commensurate with the rise in property prices across the UK which has made it almost impossible for anyone on an average income to find decent affordable property to buy or rent throughout much of the UK.

And the following:-

The great house price bubble helped cause the crash: US sub-prime loans to the poorest lit the fuse. Labour failed to build enough private or social housing while waiting lists grew. House prices doubled in the golden decade but that unearned windfall for the lucky generation went untaxed. Meanwhile housing benefit claims soared as lack of cheap council housing saw councils put people into expensive private housing instead. The crash meant new claimants among the unemployed and those whose hours and pay were cut. Councils put people into private rentals for lack of cheaper social housing, and of course the number of households is growing as people live longer. The shortage will get much worse with the housing budget halved.

https://www.guardian.co.uk/commentisfree/2010/oct/25/benefits-cut-rents-up-housing-time-bomb

Sadly the reverse is not the case.  The whole system is so damaged by now that I think reducing HB is not going to result in an automatic reduction of rents asked, although it may in areas of low private housing demand, unlikely in London.

I am perplexed by the one sidedness of the attacks on the proposal to cap housing benefit. Those criticising the proposed cap seem to assume that the rents being charged are inflexible, whereas, of course, the whole rental market is sustained by the £20bn being pumped into that market by housing benefit.

Might it not in fact be the case that the cost of rent is being kept artificially high by the high level of government support of the system, and that a realignment of rental rates is long overdue? In the circumstances, the suggested cap seems a rather modest proposal.

This last letter is astonishing for its honesty, apparently from a landlord who has the answer to the problem, at their own expense.

There is no need for people to lose their accommodation as a result of housing benefit being reduced. Rent control is a fair way of ensuring that.

Many people, myself included, who are lucky enough to have a spare house to let, set the rent at whatever the housing benefit is. There’s no reason to charge any more. Until recently I had imagined that everybody did the same.

UPDATE: Then today 2nd November came this letter as a follow up, on the subject of  “social housing”.

The sad death of council housing

Can we please stop using the term “social housing”?

I grew up in the 1960s very happily on a huge Birmingham council estate. My parents, like hundreds of thousands of others, were rehoused after the Second World War by Birmingham Corporation in new council homes.

Renting your house from the council was then a normal, decent, pleasant and rational lifestyle choice, as it still is across Europe for millions of families from all walks of life. Council housing’s relentless decay into social housing was a direct result of Margaret Thatcher’s right to buy.

This reduced the municipal housing stock, stoked a raging private housing market and drove thousands of families into private renting, creating the inflated market for both renting and owner occupation that has blighted the UK for the past 30 years and is directly responsible for the present housing shortage and the cost of housing benefit (letters, 1 November). The problem is not too-generous benefits but too-high rents.

The solution is an end to the right to buy and renewed council house building, not depriving families of the basic right to security of housing.

Roger Titcombe

Ulverston, Cumbria

A theme is emerging here from all the Guardian comments beneath various articles about cuts, and the letters above.  The first is cap rents rather than cut housing benefit, the second is end right to buy, and the third is build more council houses.

UPDATE: Saturday 6th November the saga continues in the Indie.