Housing benefit tenants are set to lose out on private rented homes as landlords look to tenants less prone to missing rental payments, in order to minimise the impact of last year’s Budget.
According to the latest research from the National Landlords Association (NLA)*, six in ten (60 per cent) landlords report that the Chancellor’s decision to remove mortgage interest relief from 2017 – announced in George Osborne’s July 2015 Budget – will reduce their profitability.
In order to recover costs, one in five (20 per cent) of those landlords say they will need to prioritise other tenant types over those perceived to be ‘riskier’ – such as tenants in receipt of housing benefit.
Tenants on housing benefit are typically viewed as riskier because of high incidences of missing rental payments, caused in part by the widening gap between market rents and the amount of benefit available to claimants. In the last year, two thirds (64 per cent) of landlords with tenants in receipt of housing benefit experienced rent arrears.
Furthermore, over the past four years, the proportion of landlords who let to tenants in receipt of housing benefit has almost halved**, with the trend looking certain to continue.
The findings are worrying news for tenants who are increasingly unable to access social housing and rely on the private sector for a home.
Richard Lambert, chief executive officer at the NLA, said: “The private rented sector (PRS) has undergone considerable growth and improvement over the last decade and it needs to continue to do so in order to meet the needs of a growing, broader-based renter population.
“Many of those who once would have expected to live in social housing now have to compete for private homes with other types of tenants. It’s a real concern because a significant proportion of landlords already choose not to let to tenants who receive benefits because the perception is they are too risky. Rightly or wrongly, young professionals or working families are seen as more likely to be better payers and less hassle to manage.
“The removal of mortgage interest relief from 2017, combined with the government’s benefits freeze and the reducing availability of social housing, will create a perfect storm whereby some tenants will struggle to find any sort of housing at all.”