Housing benefit pumped into the private rented sector is dead money
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Version 0 of 1. Last year, the government handed £9.3bn in housing benefit to private landlords – almost double the amount spent 10 years ago, according to a survey this week by the National Housing Federation (NHF). The rise is partly down to higher rents and stalled earnings, but also because the number of people in private rented accommodation claiming housing benefit has risen since 2008 from 1 million to 1.5 million. Why does this matter, if people are being housed? First, cost – in many parts of the UK, the cost of private renting far outstrips the rents offered by local authorities and housing associations. The NHF estimates that if those claiming housing benefit in private rentals were in affordable housing, taxpayers would save £1.5bn a year. And many of those taxpayers claim housing benefit themselves. But housing benefit pumped into the private rented sector is also dead money. Paying rent to your local council means the money is reinvested, in housing and other services. As long as the house stands, the revenue raised benefits the community. Paying rent to a private landlord lines their pockets, contributing to the upwards transfer of wealth from the poorest to the richest. It’s an inefficient, short-term way to spend state cash. Landlord lobbying groups, acting in the interests of those landlords with multiple properties who view themselves as entrepreneurs, always argue their members are philanthropic, providing a service out of the kindness of their hearts, and are a vital part of the economy. In reality, renting property privately is a money spinner, and each day I am inundated with tales of the miserly and dangerous ways landlords have fitted out properties and their endless refusal to fix basic problems. But the rent continues to flow. Many people on housing benefit feel they have no choice – there are landlords who won’t let to anyone in recipient of benefits, or with children, and the fees at the beginning of tenancies are often so exorbitant that people in poverty simply cannot move. For many people this situation is likely to get worse. This week the Fabian Society reported that poorer renters are at risk of huge shortfalls in rent, as the gap between housing benefit and mid-market average housing costs widens. The shortfall at the moment stands at £35, but that is projected to rise to £108 by 2020 if benefit rates do not change. People face two options: eviction, or cutting down on essentials. The problem is that many people are already paring down their consumption to levels below the poverty line. One woman I spoke to last year had eaten only sandwiches for weeks, and I’ve learnt to bring coffee to people’s homes when I interview them, as many of my interviewees can’t even afford to turn the kettle on. The move to private renting as social housing has been depleted is, and always has been, ideologically driven – social housing aims to meet an essential need while reinvesting the rent paid, whereas private renting merely enriches the lives of a small number of people. But now, the claim that private renting is as much of a social good as social housing is revealed to be a lie. When the money stops pouring in and housing benefit dries up, the goodwill of private landlords is tested and often revealed to be finite. Not everyone can or wants to own their own home – people will always need to rent. But the government can focus on ensuring homes for rent are a good investment, and safe and secure for tenants. If they truly cared about value for money for taxpayers, rather than the profits of a tiny number of private landlords, they would focus on building social housing. Join the Guardian Housing Network to read more pieces like this and follow us on Twitter @GuardianHousing to keep up with the latest social housing insight and analysis. |