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Sky High Rents Force up the Housing Benefit Bill

 

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Rent increases of 37% in just three years have forced many families onto housing benefit.  This is according to a survey by the National Housing Federation (NHF), which says that the Government’s housing benefit bill has almost doubled.  Since 2009 there has been an 86% rise in housing benefit claims from working families, with 417,830 now receiving payments and a further 10,000 applicants every week.  The root of the problem is house prices; they have risen three times faster than wages since 2001, rendering the property ladder a distant dream for many, forcing them into the rental market.

In general, those with an income of less than £16,000 per year can claim housing benefit, if they don’t have savings of a similar amount, but some families who have a higher income will be able to claim, subject to family size and disabilities.  Rising rents have increased the number of successful claimants because eligibility is based on the percentage of income taken up by rent.  The housing benefit bill currently stands at £21 billion per year and financial experts fear that it will rise to £25 billion by 2015.  In response the Government has pledged to scrap housing benefit for unemployed people under 25.

Rising tide: Rents will continue to increase says the NHF, making a difficult situation worse.

The NHF, which represents 1,200 housing associations, says that the situation will continue to get worse and is predicting a further 35% rise in rents over the coming six years.  The average rent in England stands at £181 per week – a price that is predicted to rise to £225 by 2018.  NHF chief executive, David Orr, spoke of how millions of families are struggling to keep a roof over their heads, and that these were the “strivers” that the Government had pledged to help.  He points to the building of new homes as being the only viable solution.

The year of 2011 saw the creation of 390,000 new families, but only 111,250 houses were built.  To combat the problem, housing associations are appealing to the Government to release brownfield sites to them so that they can build more properties.  The Government is believed to currently own disused land on the scale of two medium-sized cities.

Overheated: More demand due to people unable to buy a home and a lack of supply will mean rents rise faster than house prices, the NHF forecasts.

Sources: thisismoney.co.uk, housing.org.uk (image courtesy of landlordportfolio.com)