The amount that tenants can claim from the Government to support rent payments will be cut, as a new benefits cap has been announced.
According to a report by the Office for Budget Responsibility, published alongside the Spending Review this week, the Local Housing Allowance (LHA) will be frozen in cash terms from next year. This means that the rate will fall below the current level which is set to cover the lowest 30% of rents in any given area.
The National Residential Landlords Association (NRLA) is warning that the announcement represents a kick in the teeth for both renters and landlords struggling with the consequence of rent arrears through no fault of their own.
The association highlights that the current rate was set in April to help renters whose incomes had been affected by the pandemic to meet the cost of their rent. A recent analysis by the Joseph Rowntree Foundation suggests that 5% (200,000) households in the private rented sector are in arrears. 30% of all private rented households are worried about paying their rent in the next three months, compared to 19% immediately before COVID-19.
The NRLA says that the vast majority of private landlords have done everything they can to support struggling tenants. However, given that most landlords are individuals and not property tycoons it will become increasingly difficult to keep affected tenancies going without adequate financial support to pay off rent arrears.
Ben Beadle, Chief Executive of the NRLA, said: “Many renters and landlords are struggling with the consequence of rent arrears through no fault of their own yet the Government is failing to take the action needed to address this.
“Whilst the Chancellor has spoken about the need to support those who find themselves homeless, it would be much better for all concerned to provide the funds needed to sustain tenancies in the first place.”