The Government is facing a landlord backlash over plans to slash the £21 billion housing benefit bill, which has doubled in the past decade.
Private landlords say new caps on benefit from next April mean that many tenants will be unable to pay market rents, especially in high-cost boroughs such as Westminster or Kensington and Chelsea.
This, they claim, will lead to a “tenant exodus” to cheaper boroughs, putting extra pressure on councils already struggling to provide cheap homes, and causing homelessness to rise.
London Mayor Boris Johnson has also warned of the damage that could be done by the “loss of the private rented sector as a major safety net for London boroughs”. A City Hall briefing paper assessing the impact of the benefit changes estimates that “over 9,000 families (with more than 20,000 children) may have to leave London as a result of the caps alone”.
From next year, welfare rent allowances will be capped at £250 a week for a one-bedroom flat, rising to £400 a week for a four-bedroom house. Many landlords in London who have targeted housing benefit tenants are now likely to switch their focus to career professionals, especially as the private lettings market is booming in the wake of a mortgage famine.
David Salusbury of the National Landlords Association says nine out of 10 landlords would be less likely to take on housing benefit tenants if the caps went ahead.
A survey by the cross-party London Councils group suggests that 82,000 housing benefit tenants could be evicted as a result of the changes. But work and pensions minister Steve Webb says the current system “pays blank cheques to private landlords”. In one recent case, Brent council paid £2,827 a week (£147,000 a year) to the owner of a seven-bedroom house that was let to a single family.