How can the government get away with doing this to renters?

[winterwonder1]

So housing benefit if being frozen next year - yet rents are rocketing (because of the increased pressures on BTL taxation and mortgages, among other issues). Surely vulnerable people will become homeless because of this?

Housing benefit payments to be frozen again in 2025 | Kidderminster Shuttle

I don't know what the solution is, but keeping up with private rents long term isn't sustainable. It's taxpayer's money and the market rate shouldn't be dictated by arbitrary increases by private landlords. The issue, in my opinion is that the cost of privately renting is much too high, not that the benefit contribution is too low. I appreciate the net effect is a poor situation for those who need it, but I do wish there was something that could be done so that people couldn't profit in such a way for something so necessary.

@RedDeadReflection how do you get the cost of renting down?

There is a shortage of housing. If that were not the case Landlords would have to suck up some of the extra costs. To be clear, I'm not saying that landlords have it easy, in fact I think that, in a way analogous with how pensions were treated in the nineties a number of changes that would be reasonable on their own are, added together, unreasonable.

LHA is already set in a way that means it won't cover the majority of rents in the given Broad Rental Market Area. Impoverishing the tenants, or exposing them to the lottery of seeking a discretionary top up is scandalmonger for a Labour government.

It feels like a chicken and egg situation - rent prices are only raising as much as they are because so much housing benefit/UC is being paid.

@RedDeadReflection is right. It's not that housing benefit is too low, it's that private landlords are charging to much. We can't just continue to pay whatever private landlords demand, there has to be a line somewhere.

The housing system is broken. Lots of people cannot get a mortgage so have to rent - even though the cost isn’t hugely different. That means availability of rental properties is decreased. Short supply and high demand pushes rents up. Too many landlords cannot pay their buy to let mortgages and maintain the property without charging a high rent.
The selling off of council houses with no/few replacements built has made things much worse.
Affordable housing amongst new builds are aimed at HA’s buying them, not first time buyers.

Honestly I don't have a clue how you'd do it, I just know it's not sustainable long term. Private rents have increased so much over the last decade. Anecdotally I've seen houses near us start at £400pm, a decade later it's more than double.

Maybe there should be an incentive such as landlords paying no tax on their rental income providing they don't charge more than the mortgage amount + 10% or something. The incentive would be the gain in equity when selling. Or banks restrict buy to let mortgages to only those who don't need a big mortgage meaning those particular landlords don't have to charge as much to cover their costs.

I genuinely don't know how they could do it, but those reliant on benefits can't rely on (in lots of cases, not all) landlords, who are wanting to profit. Housing shouldn't be an income in that way for someone in my opinion.

Round here they’re also freezing it for Social Housing tenants, which is likely to cause problems. . Outer London is very expensive. 🤷‍♀️

We aren't in London but even here it's hard to find a house (or more than a studio or one bed flat) for less than £1000pcm, which makes it so hard for families.

But govt policy is keeping interest rates and therefore mortgage payments and consequently private rents high as well. The NI increase has added to agent costs

Landlords have to charge sufficient to cover their BTL mortgages, insurance and agents fees.

I don’t know anyone who is entitled to housing benefit. They just have to pay the full rent themselves.

Up until the last few years interest rates have been ridiculously low but that hasn't stopped rents from rising year upon year.

Almost 40% of landlords don't have a mortgage or finance against their property, that's a substantial percentage and yet we're still in this mess.

We can't hide away from the fact a lot of landlords are using this as a business. We don't want to tolerate price gouging in the NHS or public sector, when private rent is being funded by the public purse there has to be something that can be done, surely?

The solution is to build social housing, of all types, in sufficient quantities that can be rented by people on low and middle/average income, with rent control. Built to modern standards with energy saving and environmental control baked in.

Funded through institutional investment, it would provide a steady, regular return, which is what they look for. Maintenance can be through non-profit companies which can train and employ plumbers, electricians, decorators etc to maintain the buildings as necessary.

Low rents enable people to save deposits to purchase private housing if they want. Low rents also take the heat out of private rental market, releasing previously let housing back into owner occupier market.

Politicians from all sides should be working together for cross-Party consensus on a long term plan to sort this issue out. Housing should not be politicised.

I’m confused as to why you felt the urge to participate on this thread🤷‍♀️

Interest rates aren’t high! They’re pretty low-medium.

We can't hide away from the fact a lot of landlords are using this as a business

Im sorry but 😂

Were you under the impression they are running a charity?

Thread title - why government is doing this to renters. Not renters on housing benefit.

"Low rents enable people to save deposits to purchase private housing if they want."
One issue is, for those on UC, the amount they are able to save without it impacting their benefits is the £16k limit. There are not many places where that is a 10% deposit.

Admittedly I only know four landlords, but not one of them has a mortgage on the properties they rent out.

Private rents are too high, and it’s time we totally overhauled renting in the UK. Perhaps we need to be looking at rent controls, and protected long term tenancies, such as a lot of Europe have. No doubt many landlords will say “we aren’t doing that, we will sell”. Well that’s as maybe, so perhaps the Government or housing associations should buy those properties to rent out. One thing is for sure relying on private landlords does not seem to be working - for whatever reasons.

I totally agree with this. Essentially I believe it's morally wrong to drive a profit from providing something as basically necessary as the roof over a person's head. I hated it when buy to let mortgages came in under Thatcher.

The solution is to build social housing, of all types, in sufficient quantities that can be rented by people on low and middle/average income, with rent control. Built to modern standards with energy saving and environmental control baked in.

This.

Also if they stopped making it so impossible for small developers to build houses.

LL’s charge what they can get away with charging - if it isn’t a viable business and the profit doesn’t match the risks taken, which are many, why would anyone bother being a LL?

Part of the current housing problem is that a large percentage of LL’s have sold up as it isn’t worth the risk or loopholes you have to jump through - these houses are then sold and taken away from the rental market. Nowhere near enough new houses are being built for population growth.

But people who work and don’t claim benefits have to pay ridiculous prices for rent and can’t save to buy a house.

Were you under the impression they are running a charity?

Absolutely. It's called supply and demand. Being a landlord has become less attractive in recent years so there's been a significant exodus of private landlords. Less supply and the same/increased demand = higher rents.

Add in that the Labour government's budget was inflationary which means higher for longer interest rates. This results in higher costs for landlords which they will look to pass on.

I looked at buying a BTL flat in central London a few years ago when interest rates were still low and the rental yield (annual rental income as a proportion of property value) was 2.5% at best. If my mortgage rate was more than that, I'd be making a loss, plus I'd have paid for the service charge and maintenance/insurance etc out of any profit. Unless there's capital uplift, the sums really don't work in most cities for landlords that haven't owned the property for a while/don't need a mortgage.

And yes, of course landlords look to make a return on their investment. As everyone else does when they put money in a savings account or invest it, as there's an opportunity cost of tying cash up in property.

Well, exactly! Of course it is a business. Landlords are getting a return on the money they have invested in rental housing. Why would they bother if they got no return?

The solution is to build social housing, of all types, in sufficient quantities that can be rented by people on low and middle/average income, with rent control. Built to modern standards with energy saving and environmental control baked in.

Could not agree more. But a building programme of this magnitude will take at least ten years to show results. We do not have the builders for starters.

So the dilemma the government has is what can we do NOW to alleviate today’s problems.

The housing market in many parts of the country is completely distorted by housing benefit. It would be cheaper in many areas for the LA to buy up/buy back former LA housing and to purchase and renovate some older private housing.

No, I was replying to a poster who said landlords are charging more because they're being charged more. That's not necessarily the case. For landlords it's a business, they're charging more because they can, not because they need to. But thanks for the helpful contribution to the thread.