Landlords ripping off taxpayers?

A study by the Department for Work & Pensions entitled 'Low Income Working Households in the Private Rented Sector’ found that despite offering worse conditions landlords were charging higher rents to housing benefit claimants than to low paid working adults.

The Study concluded that private landlords with housing benefit tenants were charging the maximum amounts of rent possible – the implication being that landlords were ripping off the taxpayer.

Another aspect of the research highlighted the fact that benefits paid to private sector landlords have risen much quicker than the charges paid by tenants in the social sector.  The rises above inflation over the last decade have been 36% and 19% respectively.

Shock horror!
Well shock horror - landlords are trying to maximize their profits.  There was me thinking I was running a charity!

There are a number of issues which I would highlight from this research:

Firstly, £8.5 billion does seem an awful lot of money.  However, how much would it cost the public sector to build and then manage the number of houses to provide the accommodation provided by the private rental sector for those tenants receiving benefit.  The answer I suspect is a hell of a lot more than this.

Secondly, the changes to the system of housing benefit under the LHA were bound to encourage landlords to seek out the cheapest property in each BRMA that they could then let to a tenant.  This only makes good business sense for a landlord looking to maximise their rental yield.

Thirdly, rents for tenants on benefit need to be arguably higher to compensate landlords for the greater risk a landlord takes on for renting a property to tenant on benefit in that they will not be paid or that the tenancy will be problematic.

The reality is if there is a problem with the current Local Housing Allowance system which we think there is.  It is not reasonable to blame landlords for working within the system designed by government and their minions.  Research like this is easy fodder for those elements of society who wish to vilify landlords and exploitative individuals feeding off the misfortunes of the poorest members in our society.  In reality the blame lies with governments who seem unable to produce a benefit system which incentivize landlords to provide quality accommodation whilst making a reasonable return.

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