Spiralling housing benefit costs in the PRS mean it’s time to cut out the free market

Astonishing figures recently published by the GMB union show the huge profits that landlords in the private rented sector are making through housing benefit payments.

The numbers show how the welfare bill is directly inflated by the huge rents that landlords are charging to their tenants on housing benefit, costing the state millions each year and ending up in the pockets of a small number of people

Based on Freedom of Information requests, the GMB’s figures list the top twenty highest earning landlords in London boroughs and English councils through housing benefits payments. The fact that landlords in the private sector can receive so much in taxpayer-funded spending shows that rents are out of control.

It also shows how misdirected anger against supposed ‘benefit scroungers’ is, when the money goes straight into profits for many landlords, simply because there is an affordability crisis in the PRS. Due to the chronic lack of housing in certain areas of the country, these high rents are inevitable and leave both individuals and local authorities with no choice but to house people in vastly overpriced accommodation.

The current government spend that is going directly to private sector landlords once again indicates that a new approach is needed which bypasses the free market and allows the state to build a stock of permanently affordable privately rented housing. Generation Rent is exploring this new approach, which would see housing sold at cost price and meaning landlords could only rent it at a reduced level, reflecting the smaller risk taken and the lower price paid.

 Alongside social housing for low-income tenants, such a policy would mean cheap housing with cheap rent be accessible to a wide range of individuals. It would allow individuals to more easily get on the housing ladder, facilitate movement between social housing and home ownership as well as meaning people renting in this cheaper, secondary market would be able to save up for deposits on open housing market. The PRS has massively grown in the last twenty years and is becoming a much more permanent living situation for millions across the country – now we need to make it affordable too.

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  • followed this page 2014-04-18 14:57:32 +0100
  • published this page in Blog 2014-03-26 08:34:43 +0000