Private landlord regulation ‘needed to control Housing Benefit’

5 Jan 15

Tougher regulation of the private-rented sector is needed in order to stop landlords from exploiting the housing crisis at the expense of taxpayers and tenants, according to the Civitas think-tank.

 

Its report, published on January 2, noted that around 1.7 million tenants now require Housing Benefit subsidies to meet their housing costs, a number that has more than double since 2003/04.

The amount of Housing Benefit claimed by private tenants has also more than doubled, up from £3.9bn in 2003/04 to £9.5bn in 2013/14.

Report author Daniel Bentley argued that Housing Benefit was supporting the rent inflation it is supposed to alleviate.

He said: ‘Unfortunately, the Housing Benefit system, which effectively props up purchasing power at the lower end of the market, militates against fair prices by subsidising landlords’ rent demands.

‘This vicious circle will only worsen as the private-rented sector comes to represent an ever-larger proportion of the housing market and more and more tenants have to fall back on Housing Benefit.’

Bentley is recommending that private landlords should offer indefinite tenancies as the norm, with caps placed on how much they can increase rents by. Exceptions to these rent ceilings would be made where the landlord has made significant improvements to the property. Landlords who buy new-build rather than existing properties would also be exempt from the regulatory regime.

‘A system of in-tenancy rent regulation needn’t result in an exodus of private landlords, many of whom have invested to capitalise on rising house prices and are influenced in their investment decisions by a much broader range of factors,’ he said.

‘Either way, future landlord investment must be nudged towards new-build rather than being encouraged to buy up existing owner-occupied homes.’

  • Vivienne Russell

    Vivienne Russell is managing editor of Public Finance magazine and publicfinance.co.uk

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