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Private landlords to slash rent in order to keep tenants

July 5th, 2010

Private landlords are facing to slash rents if they want to keep their current tenants because of large cutback on housing benefit by the Chancellor.

More than one million families who receive housing benefit will have to find extra money in order to pay their rent to private landlords from next year. 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 the new 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 hopes that the new cap will stop the problem of “greedy families trying to live off benefits in expensive and extravagant parts of London.”

So what is going happen to private landlords? The answer is simple, they will have to evaluate and check and much they can afford to cut their rent by in order to retain their tenants. Chris Norris, policy manager for the National Landlords Association, said: “Landlords will have to look at their profit and loss and decide how much they can afford to cut their rents by. If they are not going to do that, they will have to seek non-housing benefit tenants or sell up.” He added, “Many people will be forced to cut back on essentials like food and electricity, or take on extra debt, just to make ends meet.”

Campbell Robb, chief executive of Shelter, said the changes would cause “significant social and personal upheaval”, create “huge clusters of poverty and inequality, creating an even bigger gap between rich and poor”.

However according to Steve Webb, a Liberal Democrat Work and Pensions minister, defended that the cuts insisting they were “fair” to people on low salaries. He said: “The state is paying someone who is unemployed to live in a better house than someone who takes a low paid job. You can see the unfairness of that.”

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