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London housing market crisis

June 28th, 2010

According to the Guardian: “In capping housing benefits, the chancellor blamed the housing benefit bill on greedy families who are looking to net over £100,000 a year from the state. But it was two governments and mayors overseeing a fall in the stock of social homes in London that forced the housing benefit bill up in this city, as waiting lists almost doubled in length.”

 

Chancellor George Osborne set out plans to slash the amount of money received by families claiming housing benefit. He has announced a restriction on housing benefits and plans to reduce their cost by almost £2bn in today’s Budget. For example in central London, the Local Housing Allowance  gives families in four bedroom homes up to £1,000 per week to pay their rent.

According to the Greater London Authority’s rent map, “the median weekly rent for a four bedroom home in Westminster is £1,100; in Camden £825; in Southwark £450. So, the chancellor decided that the new cap will stop the problem which is greedy families trying to live off benefits in expensive and extravagant parts of London.

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Source, London evening Standard

 

The effect of this cap will be to evict families on social housing waiting lists from central London, forcing them to find a home in east London boroughs where rents and housing allowances in general fall under the cap. Councils are concerned that thousands of poor families living in central London are right now at risk of losing their homes because of the new housing benefit reform.

London Councils, which represents the 33 boroughs, warned that “the capital would be hit “disproportionately” and said it has been inundated by calls from alarmed housing officers.”

Kay Boycott, director of policy and campaigns at Shelter, said: “Claimants will be receiving a reduced amount of support forcing them to make up an even bigger shortfall to stay in their homes. Unfortunately, for many this will mean borrowing on credit cards or cutting back on essentials.”

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