Member Article

Welfare Cap: Rent is first bill unpaid

A North East property expert believes the government’s newly-introduced welfare cap might mean “unintended havoc and untold damage” for local landlords – despite proving popular with the public.

Rolled out across the UK this week, the cap is designed to ensure families cannot receive more in welfare than they could by working, limiting the benefits payments couples and single parents can receive to £500 a week.

The cap includes housing benefit, as well as child benefit, jobseeker’s allowance and incapacity benefit with 56,000 UK households set to be affected - each losing an average of £93 a week.

Ajay Jagota of KIS Lettings, who manage properties for 700 landlords from branches in Sunderland, South Shields, North Shields and Welwyn Garden City fears the cap might impact very negatively on local landlords.

He said: “Polls show that most people are very strongly in favour of the welfare cap – and why shouldn’t they be, no-one wants to see people getting more on benefits than they would by working.

“The problem is, there is no guarantee that the Welfare Cap will actually stop that. What is more, there may be any number of unforeseen consequences which could cause unintended havoc and untold damage to landlords.

“If your income goes down by £100 a week, which bill goes unpaid first? Your children’s food, the heating in winter, or the rent? Realistically, it’s the rent every time.

“If that does happen many landlords won’t have pockets deep enough to cope – especially the quarter of landlords who only rent out one property, often accidental landlords managing family assets as best they can.

“The government has talked a good game about levelling the playing field between social housing and the private rented sector, but just this month they announced that if social landlords see tenants fall 8 weeks behind with their rent their landlords will start to receive housing benefit direct. Private landlords, who are now the biggest player in rented housing, will not get this luxury.

“Recent research shows that at least 7% of landlords have already lowered rents just to hold on to tenants. My fear is this won’t be the first tough choice some landlords are faced with.”

This was posted in Bdaily's Members' News section by Ajay Jagota .