Benefit cuts to put further strain on social housing

Thousands more tenants in the North East could be trapped on the social housing waiting list following the Government’s latest benefit changes.

North East lettings expert Ajay Jagota has spoken out about the possible impact of the proposed cuts and changes and the effect it could have on housing.

Ajay, managing director at KIS Lettings, said that Iain Duncan Smith’s suggestion to cap child-related benefits might help to ease the benefits bill by encourage more people to seek employment and think carefully about adding to their family. But he is concerned about the effects that the Secretary of State for Work and Pensions’ proposal would have on families on low or no income when combined with the other cuts that are already planned.

“The Government has already announced that it will bring in a Universal Credit system starting here in the North East in April next year, which will be an all-in-one benefit payment. Payees will be given a lump sum and from that they will have to pay for food, housing, fuel bills, clothing and other day-to-day expenses,” said Ajay.

“My worry is that this latest suggestion would place yet another financial restraint on families who are already struggling. They will be squeezed tighter than ever and with one payment having to cover everything they will need to prioritise and it’s natural that food and heating may take a precedence over rent payments.”

New figures show rental arrears 9.1 percent of all rent in the private sector is in arrears and there has been a 70 percent rise in court orders to evict private tenants over the past three years.

Ajay commented: “In England housing benefit for those living in private rented accommodation is paid direct to tenants and this will continue under Universal Credit. But it’s been announced that in Northern Ireland the benefit will continue to be paid direct to landlords. This is clearly working well as only 3.8 percent of Northern Ireland rents are in arrears.”

In England in the last five years, the number of households privately renting has soared to more than 3.6 million - one in six households. Private renting is no longer the domain of highly mobile students and young people. There are now more than one million families with children renting privately; almost double the number five years ago.

Ajay added: “I understand the coalition needs to save money, but it’s just a matter of time before this domino effect will lead to them having an even larger social housing crisis on their hands.

“Statistics already show that more tenants in private rented housing are in arrears and landlords are within their rights to seek eviction through the courts those owing eight weeks or more rent. When the cuts and changes come into play in 2013 money is going to be even tighter, more rent payments will not be made and it’s highly likely more landlords may take the decision to evict tenants in arrears from private rented accommodation.

“Landlords are not likely to continue letting to housing benefit tenants, especially when demand for rented property is so high. So the tenant will have to go to their local authority for help – in other words, they will join the social housing queue which is already showing the strains of a depleted housing stock as some councils are relying on bed and breakfasts and are exceeding the six week limit.

“It could be a very vicious circle with more families than ever before relying on social housing and the Government’s current money-saving strategy backfiring in a very costly way.”