Over half a million tenants who receive low pay are facing financial difficulty after the Government chose to freeze housing benefit. This move is also set to cause problems for landlords. The Chancellor George Osborne announced the four year freeze back in his summer budget in an attempt to make the welfare system more sustainable.
It has been said that the freeze will mean that low income households will be ‘priced out’ of several parts of the country. By 2020, families with low income in Manchester and Bristol will have had a shortfall of around £1,300 per year between their rent costs and the benefits that they receive. Since 2009, the amount of households who need help to pay their rent has doubled. Over 550,000 people who receive housing benefit work more than 16 hours a week, an astonishing increase from just under 300,000 six years ago.
The reforms to the benefit system are already deterring landlords from renting to low income families. According to the National Landlord Association, the amount of landlords who are willing to rent to benefit claimants has fallen drastically in recent years. The NLA have also warned that the cuts leave tenants vulnerable to landlords who are looking to exploit them. The amount of money that Britain spends on housing benefit for privately rented homes has increased to over £9 billion a year. Figures show that one in four private sector tenants now claim housing benefit.
The Government has been asked to build more homes ‘that people can afford’. Back in 2012, the Mayor of London Boris Johnson said he opposed using housing benefit reforms to price poor families out of the city’s more expensive residential areas. However, critics are saying that they believe this is exactly what has happened since the Conservatives came into power. One said that the ‘low wage economy’ was forcing working families to claim housing benefit just to stay in their homes.
A spokesperson for the Government said that the reforms would ensure ‘work always pays’ and that with the introduction of the National Living Wage, a ‘higher wage society’ would be developed. She added that the Conservatives have set out an ‘ambitious’ house building plan, the likes of which haven’t been seen since the 1970s. She said that this was to make sure people could afford to achieve their aspirations of buying their own home.