Rent caps could leave 340,000 homeless

A survey suggests a third of social tenants could be made homeless and 90% of landlords in London and the South East will be affected by the upcoming changes in housing benefit legislation.

The Chancellor announced plans in June to cap the level of Local Housing Allowance (LHA) payable to between £250 per week for a one-bedroom property and to £400 per week for a four-bedroom property.

Upad.co.uk, the UK's largest online lettings agent, reported that just under 40% of survey respondents say their rental payments will be affected with 90% of those letting in London and the South East affected by the change.

A third of landlords in the Midlands and North West, as well as a quarter of those in Scotland also say they will be hit.

Half the landlords whose tenants pay more than the government cap said that they would ask their DSS tenants to leave and let the property within the private sector.

Another 34% said that they expected their tenants to replace lost housing benefit from other sources of income and only 12% intend to lower their rents to the new LHA levels.

If these figures were replicated across the UK, 340,000 of the million people currently claiming Local Housing Allowance could find themselves out of a home, said UPad.

James Davis, Upad's CEO, said:

"Some property industry observers have speculated that LHA levels have artificially inflated the market and that removing them will lead to a general lowering of rents, but clearly many landlords disagree with this.

"We expect private sector rents to hold their value, which will only encourage landlords to abandon the social sector."

Many landlords highlighted administrative problems with the way that housing benefits are paid.

One landlord said: "I shall not be letting to housing benefit tenants again because of the difficulties in collecting rent since the system changed so that rents are paid direct to tenants."

Davis added: "The proposed levels of rental amounts are only half the problem. The bureaucratic and obstructive system of payments discourages many landlords from operating in the social sector, whatever level of rent they need to achieve. Unless this is addressed as a matter of urgency, we can expect to see private landlords wholesale abandon the social sector."