Housing benefit reductions - Not all doom and gloom

As millions of people who claim housing benefit prepare to have their allowances capped in light of new Governmental reforms, all is not doom and gloom for the residential landlord, according to Richard Jones of Ilkestonproperty.com.

Ministers had planned to cap allowances from Next April onwards, but new reports indicate that existing claimants may have until January 2012 to adjust their circumstances prior to the changes being made, despite The Department for Work and Pensions failing to confirm the move.

Causing a state of angst among many UK landlords, the forthcoming cuts will mean that the new limits are £250 a week for a one-bedroom home, £290 for a two-bed, £340 for a three-bed and £400 for a four-bed home.

The caps have also given rise to fears among claimants that they will no longer be able to cover their rents, causing them to move to smaller properties elsewhere, or relocate entirely.

Director at the Derbyshire letting agents, Richard Jones said: “Here at Ilkestonproperty.com, we are warning landlords that they should keep abreast of the imminent changes to Local Housing Allowance (LHA), but it isn’t all doom and gloom.

”Firstly any reduction in housing benefit that the tenant may experience, can be made up from other benefits that the tenant will receive. This means that being able to top up any rents they are contracted to pay under their tenancy agreements, should not be a major problem.

“Secondly, any changes will have to be phased in gradually to avoid tenants not being able to pay their rent on mass! This should give ample time for the changes to be absorbed naturally, by things like annual increases in benefits that tenants are entitled to. There is a shortage of housing already, and the Government is aware of the importance of the private rented sector, and the need for landlords to have financially viable buy-to-let properties, which they are entitled to make a profit on

“Thirdly, the Government are looking at ways to pay the landlord direct, in return for financial incentives, such as reasonable rents, but there seems to be a lot of uncertainty within the Government, as to what will be implemented and when.

“The Government do not want landlords to turn their back on LHA tenants in favour of working persons, so what is needed for both the landlord and tenant, is clarification of this issue, which will in turn bring stability to the private rented sector”, added Richard.

For more information on LHA, visit: ilkestonproperty.com