Local Housing Allowance should track rents

Timothy Douglas, Propertymark's Head of Policy and Campaigns was invited to give evidence to the Department for Work and Pensions Commons Committee hearing on the current benefit levels in the UK on 28 June 2023. He outlined the impact they are having on the private rented sector.

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PRS is a key stakeholder

Propertymark and other experts representing landlords, tenants, policymakers, and the homeless looked at a vast array of areas LHA’s impact those across the housing sector and we stressed that the DWP should engage more with landlords and recognise they are stakeholders in the housing allowance scheme.

The demand for rented property continues to outstrip supply in a highly competitive market. Evidence from a survey of Propertymark members shows that demand is up 24% in April 2023 compared to the previous year.

Douglas stated that benefits are not keeping up with rising rent, and further pressure has been placed on the PRS because of low social housing stock, leading to vulnerable tenants being priced out of the market.

LHA lagging years behind

Propertymark has long called for LHA to be set to at least the 30th percentile, if not the 50th percentile, and increased annually to keep up with market rents.

Current LHA rates have been frozen since 2020. Drawing on research by the Bevan Foundation in Wales and Centrepoint in England, Propertymark highlighted the glaring gap this has created in our response to the House of Commons Work and Pensions Committee inquiry to help inform current and future UK Government thinking on the adequacy of benefits and is also looking at the relationship between social security and the labour market.

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09 May 2023
Propertymark highlights issues with housing related benefits

The House of Commons Work and Pensions Committee has launched an inquiry to help inform current and future UK Government thinking on the adequacy of benefits and is also looking at the relationship between social security and the labour market.

The fact that Universal Credit has got some tenants into debt whilst waiting for the initial payment is also completely unacceptable, the five-week wait is an issue, and Propertymark, again stated to the Committee that we recommend turning the advance into a grant, with more flexibility over the regularity of payments. This had been discontinued during the pandemic and we want to see it reinstated.

Rent controls – no evidence of success

Examples of rent pressure zones were cited, which were introduced in Northern Ireland and resulted in squeezing out existing landlords.

Rent controls are often meant to be temporary measures but many are extended, as is the case currently in Scotland with the Cost of Living (Tenant Protection) (Scotland) Act 2022 Act shoe-horning in rent caps and extensions added every six months. A legal challenge was lodged against the Scottish Government by Propertymark, the Scottish Association of Landlords and Scottish Land and Estates after a rent cap and moratorium on evictions were passed by the Scottish Parliament in 2022 and subsequently amended and extended until March 2024.

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10 May 2023
Judicial Review hearing evidence

Propertymark’s joint action with the Scottish Association of Landlords and Scottish Land and Estates was heard in the Court of Session in Edinburgh, Scotland’s highest civil court, on Thursday 4 May 2023.

With what’s happening in other devolved nations, the knock-on impact is already being felt in England as landlords raise rents to protect themselves in case similar rules are applied.

Tax incentives

It was generally agreed there is a chronic undersupply of housing and a drop in new lettings possibly because of the tax advantages of short-term lets, tax increases on private landlords, and the rise in interests is all reducing investment in the rental market and Propertymark strongly recommends the UK Government undertakes a review of taxation for private landlords. The private rental sector was devolved, and primary legislation was implemented in this area across all the devolved administrations.

Calculation of local housing allowance

Understanding and gathering local rent information has improved and the mandating of the submission of information could be achieved by using a Landlords Register and the Renters Reform Bill. The Valuation Office Agency (VOA) look at returns on the stock of lettings but does not consider rent on new properties coming on the market. To make the whole system bona fide, Propertymark wants to see achieved rather than advertised rents to calculate accurate figures, although we appreciate the VOA collects rent data on new, existing and renewal figures.

The decision to phase out Mortgage Interest Relief and other unfavourable taxation policies is resulting in landlords facing unprecedented financial challenges. If a decision to implement a pro-growth taxation agenda for the private rented sector is not brought forward, it will be the most vulnerable tenants who are negatively impacted, many of whom are in receipt of benefits.

The UK Government must increase housing options for the most vulnerable by setting Local Housing Allowance at the thirtieth percentile, if not the fiftieth, and to increase this annually to keep pace with market rents.

A change in rhetoric is also needed with policy makers viewing private landlords and letting agents as part of the solution to resolve the housing crisis. After pressing them to do so, we are pleased to see that the Department for Work and Pensions is now investigating ways in which it can engage with membership bodies such as Propertymark and our partnership with the Valuation Office Agency will continue to ensure that letting agents provide rental data to support rent officer valuations and housing benefits.

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Timothy Douglas Head of Policy and Campaigns | Propertymark