Where housing benefit really goes

A press release from GMB union last week stated: HUGE PAYMENTS FOR HOUSING BENEFIT IN EAST OF ENGLAND SHOWS LANDLORDS ARE THE REAL WINNERS FROM BRITAIN’S WELFARE SYSTEM. Amongst the statistics that accompanied this release were the following, directly relevant to everyone in south Essex:

• Regis Direct Plc – £725,000 from Southend, £24,000 from Rochford. Donated £7,900 to Conservatives in 2008.
• Thorney Bay Park Ltd – £1.45m from Castle Point. Donated £3,000 to conservatives in 2001.
• Horwood, PACE plc – £596,000 from Southend, £12,500 from Rochford
• Martin & Co – Letting Agents, £3.1m from 20 districts nationally. £484,000 from Southend and £19,000 from Rochford
• Hopson Property Management Ltd – £761,000 from Southend
• The Letting Shop – £136,000 from Colchester and £29,000 from Chelmsford
• Northwood – National lettings Agency getting over £2.3m nationally. £251,000 from Milton Keynes, £162,000 from Chelmsford

I oppose the housing benefit cap because, whatever the intentions, its actual consequence is to drive the poor out of expensive areas. The effects of this are being felt in Southend as Londoners seek to escape over-priced and unaffordable accommodation costs.

Tenants do not get housing benefit – it goes straight to landlords. Despite what some of the headlines may imply, no-one on welfare is being made rich by housing benefit. There are those who are coining it in – the landlords. I think there is a problem here, and the solution is not the cap. The solution lies ultimately in the need for affordable housing, which can only be met with a vigorous house-building program.

There are 16,439 private rented households in Southend-on-Sea. 10,282 (62.5%) are in receipt of housing benefits.

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2 Responses to Where housing benefit really goes

  1. There are those who are coining it in – the landlords. I think there is a problem here, and the solution is not the cap.

    Certainly the figures you quote above are eye-watering, but then these are big businesses providing accommodation to a large number of people. I find it a little distasteful that companies can create a business from “housing stress” (sort of privatising misery), but some more analysis would be useful:
    – how much of these companies business is actually funded by housing benefit?
    – what margin do these companies make and how does this compare to the margin made on (comparable*) directly rented properties? * Is such a comparison possible?
    – given the security of this (housing benefit based) business (no bad debts, few void periods etc.) what discount on the directly rented margin should we see?

    The solution lies ultimately in the need for affordable housing, which can only be met with a vigorous house-building program.

    Agreed – your empty housing issue seems to be in the freehold sector. But this is a big-state operation – the private sector has shown it can not (or does not want to) do this – and this government won’t do “big-state” stuff – like climate change or social housing – unless Conservative voters are being flooded, when it’s money no object.

    We possibly also need to take a more “continental” attitude to housing – where “owning your own home” is not the be all and end all and there is a more vibrant competitive rental sector. We almost fetishise housing. It is ludicrous seeing our homes as “an investment” before we see them as “a roof over our heads”. First rule of investing: don’t invest in just one commodity. Second rule of investing: within a commodity, diversify your holding across a number of assets. And yet most of us who own our home have the majority of our wealth invested in this single asset!

  2. Joe Cooke says:

    Well said Julian. Seems to me though, that only Social Housing building will solve the housing crisis. Adding more houses for purchase, affordable only by those with sufficient deposit and income, wont dent the waiting lists, even with the token social housing associated with each building project. We need more Council/Housing Association properties to let, at reasonable rents and with security of tenure. The Tories have introduced insecurity into the two important areas of jobs and homes with their “Zero Hours” jobs and 5 year tenancies – recipes for stress and disharmony.

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