Latest news

Today in politics: The benefit cap, RICS figures and call for evidence on coronavirus

Sally Walmsley
Written by Sally Walmsley

We look at the Resolution Foundation report calling for the benefit cap to be axed, figures from RICS predicting 2.5% annual rent rises, calls for data on the impact of coronavirus on benefits claimants and more.

Call for benefit cap to be axed

The Resolution Foundation has published is Housing Outlook for Q2 2020. Addressing the ramifications of coronavirus on the market it notes: “Renters of both stripes – who even prior to the crisis spent more of their incomes on housing costs than owners – look set to be harder hit by the income shock. 

“In the absence of a long-term relationship with a lender, or the security of some equity in their home, help for this group will largely come from the state. 

“Renters do not start from a strong place in this regard: the average share of rent covered by housing benefit (the housing element of universal credit or its equivalent in the legacy system – hereafter HB) has fallen substantially since 2011. 

“However, the Government has rightly acted quickly to bolster HB adequacy for private renters in recent weeks, repegging the local housing allowance (LHA) rates to local rents after seven years of minimal uprating at a cost of £1 billion.

“This welcome move means private renters with constrained incomes can now receive support with housing costs up to the 30th percentile of local rents. 

“Stepping back, however, it is clear that this is not a wholesale solution and could still leave many with significant shortfalls. 

“It is reasonable to expect a large number of private renters seeking support from the benefits system in the coming weeks to live in homes priced significantly above the LHA rates (note, for example, that 84 per cent were not in receipt of HB prior to the crisis meaning many are unlikely to have chosen their homes with benefit levels in mind). 

“So how is the typical private renter affected by the coronavirus income shock likely to fare in the foreseeable future?”

It goes on to say: “So how could those that fall out of work with rents above the 30th percentile be supported in these troubled times? Some degree of forbearance from private landlords could be expected: they are not highly leveraged as a group (39 per cent of landlords have no mortgage) and less than half report holding property for the income stream. 

“However, allowing renters’ housing security to rest in the gift of individuals is less than ideal. 

“While the Government recently extended the period of notice a landlord must give a tenant in England and Wales from two to three months, the evidence suggests it may be necessary to go further and offer renters greater assurance that their homes will be safe for the foreseeable future (for example, by aligning with Scotland where renters now have a six-month grace period in the event of rent arrears).”

It argues to that in respect of the benefit cap, its “rationale is clearly at odds with both the public health requirements, and the labour market realities of rising unemployment and waning vacancies.”

It concludes: “The Government’s coronavirus package has been swift and extensive, but without further action far more renters than owners look set to struggle with their housing costs in the foreseeable future.

“Increasing security of tenure would protect those renters who cannot help but run up arrears as they adjust to the massive coronavirus income shock. 

“But alongside this, the evidence suggests the smartest move right now might be to help as many families as possible pay their rents in full by suspending the benefit cap.”

RICS predicts 2.5% annual rent rises

RICS has published its Residential Market Survey for March 2020

In respect of the rental market it notes: “In the lettings market, tenant demand was more or less stable in the three months to March (non-seasonally adjusted series). 

“Alongside this, landlord instructions fell once more, with a net balance of -32% of contributors noting a decline. 

“Again, the virus outbreak has had a significant negative influence on near term rental growth projections, which slipped into negative territory during March. 

“While rents are now seen stagnating over the next twelve months, medium term projections have only been downgraded slightly compared to the February figures, with average annual growth of 2.5% anticipated through to 2025.”

RICS has called for a stamp duty holiday as “one of the ways to reactivate the housing market quickly as a short-term measure.” 

Call for data on impact of coronavirus

The Work and Pensions Committee has announced it wants to hear about how coronavirus is affecting people who rely on the benefits system as part of its new inquiry into the DWP’s response to the virus outbreak.

The committee is interested in finding out about the experiences of people who are having to claim benefits for the first time, the experiences of people who were already claiming benefits, and the experiences of people who need support but find they can’t claim any benefits. 

The Committee has also published a letter from the Permanent Secretary at the DWP responding to several questions about the Universal Credit application process and how the Department is dealing with the unprecedented increase in applications. 

The letter reveals that over one million new claims were made between 16thMarch and 3rd April this year.  

Benefit claimants wanting to take part should complete the survey here.

The deadline is 15th April.

Commons paper on support during coronavirus

The House of Commons Library has published a briefing paper outlining the measures introduced by the Government, and other authorities, to support household finances during the coronavirus (Covid-19) outbreak. 

Updated fire safety guidance announced

 MHCLG has published statutory guidance on Fire safety: Approved Document B. It can be accessed here. The content has been reworked to make clearer and easier to understand.

About the author

Sally Walmsley

Sally Walmsley

Sally Walmsley is the Magazine and Digital Editor for the NRLA. With 20 years’ experience writing for regional and national newspapers and magazines she is responsible for editing our members' magazine 'Property', producing our articles for our news site, the weekly and monthly bulletins and editorial content for our media partners.

2 Comments

  • They need to stop the benefit cap. I have struggled to keep up with rent payments it’s stressful not just for me but my children

  • Why hasn’t it been lifted the benefit cap is making so many people suffer and struggle. They rise benefits and take it away if your benefit capped. HOW IS THIS RIGHT????

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.