Latest Government figures reveal significant rises in the number of private tenants claiming Local Housing Allowance (LHA). According to Paul Shamplina, founder of Landlord Action, a company specialising in tenant eviction, more must be done to re-balance the rules and subsidies in order to encourage landlords to support this important part of the private rented sector (PRS), rather than pulling away from it as many have threatened.
An uncertain economy on the brink of slipping back into recession has not only forced flat-lining wages, increased cost of living and rising unemployment figures, but pushed even more households into the category eligible to receive LHA. Paul Shamplina comments. “I am not at all surprised by the figures revealing dramatic rises in tenants claiming LHA, as these sit in line with our own experience of carrying out more evictions against LHA tenants than ever before.”
Rise in claimants
The Government figures show that in some parts of the Midlands and the North, the number of claimants is up by as much as 46 percent. Overall there has been a near 18 percent rise across London with some outer London areas rising by as much as 63 percent in the year to June 2011.
Paul adds “In my opinion, the law change in 2008, which saw direct payments made to tenants rather than landlords, was one of the worst laws to be enforced in the buy-to-let market. From speaking at many council and property events, this coupled with the caps to LHA brought into force in April 2011, has forced the vast majority of landlords to look at withdrawing from providing accommodation to this sector.”
Social housing at an all time low
It is fact that LHA tenants are likely to stay in a property longer and take better care of it. With social housing at an all time low and the PRS set to grow by 20 percent by 2020, Paul Shamplina believes the Local Housing Allowance rental market could be very important to private landlords and local councils going forward.
“Having run several LHA events, we have found that, as long as they have a sound understanding of the system, many landlords make good money from this sector, whilst practicing individual social responsibility. Before dismissing renting to LHA tenants, landlords should discuss the possibility of receiving direct payment, obtaining a guarantor that is working or has an asset, or look at getting an undertaking by way of credit union payment to guarantee rental income.”