New research from the United Kingdom’s (UK) National Landlord’s Association indicates the majority of landlords do not prefer to rent to tenants who use government housing allowances. Experts say they understand landlords’ fears regarding Universal Credit and the possibility of not receiving rent due to changes in the benefit system, and that the UK government must work to restore confidence. The data show that smaller landlords have a bigger problem with renting to tenants who need aid, and that all landlords prefer tenants with children, presumably because they represent a safer long-term investment. For more on this continue reading the following article from Property Wire.
The number of landlords letting to tenants in receipt of local housing allowance in the UK has fallen by 7% to 27% since the first quarter of this year, according to the latest research from the National Landlords Association (NLA).
The research also found that 38% of all landlords are worried about the impact of Universal Credit and over half, 51%, of landlords are actively choosing not to let to LHA recipients or other benefit claimants.
The reluctance to let to this market is strongest amongst the smaller landlords, with six in ten ruling out letting to this tenant type. In contrast, the most popular tenant types are families with young children with 51% of landlords letting to this market and young couples with 51% of landlords also letting to this market.
‘Our research highlights how worried landlords are about the impact of Universal Credit and that they are choosing to withdraw from the local housing allowance market,’ said Carolyn Uphill, chairman of the NLA.
‘This concern is understandable, particularly with the uncertainty that the changes to the benefit system bring. Quite simply, they are worried the rent won’t be paid and that they will not have the system of direct payment to fall back on,’ she explained.
‘However, the government relies on the private-rented sector to support the provision of housing for those in receipt of benefits so it needs to act quickly to restore landlords’ confidence, showing it grasps the practicalities of renting.
‘Renting is a business and landlords must balance their needs with an understanding of the pressures experienced by their tenants. It is essential that they work with tenants in receipt of housing support to ensure they are aware of the forthcoming changes and are seeking advice on budgeting for monthly payments,’ she added.
Meanwhile, separate research shows that planning and licensing crackdowns on private rentals by some councils are putting off 75% of landlords from investing. This is because councils apply article 4 directions and additional/selective licensing schemes to manage buy to lets and houses in multiple occupation (HMOs).
A survey by investment mortgage lender Paragon found that three out of four investors are discouraged to invest in towns and cities with the selective licensing schemes.
Only 20% felt selective licensing made no difference their rental business, even though they have to register with the council and pay licensing fees. Another 14% cited borough wide licensing or article 4 directions like those in Newham, East London, and Oxford, were their worst fear.
‘It is clearly important that landlords who operate in the buy to let market are regulated and run responsible businesses. However, what our survey shows is that landlords are becoming increasingly concerned about selective licensing and other areas of regulation,’ said Paragon director John Heron.
‘If selective licensing is employed in the appropriate way it will be beneficial in areas that need it, but there is a danger of putting off new landlords, which the market needs in order to grow, if a broad brush approach is taken,’ he added.
Article 4 declarations control letting family houses to groups of three to five tenants sharing, typically students. Landlords have to gain planning permission to open new shared homes in these areas. Additional or selective licensing applies to all private rented homes in a designated area. All landlords must register with the local council and pay a licensing fee to rent out property.
This article was republished with permission from Property Wire.