Housing benefit reliance on buy-to-let landlords

Housing benefit reliance on buy-to-let landlords: Top areas revealed

Blackpool tops the charts for the highest percentage of benefit claimants reliant on private lettings, with 72% of people in privately let homes. ​Residents in the City of London and Shetland Islands are likely to be largely unaffected, with few claimants choosing the private rental market.

Urban.co.uk's new map, shows which UK towns could see the biggest impact from the Universal Credit changes.

With the introduction of Universal Credit, housing benefit is changing, and as such, many landlords who have previously been happy to take on tenants receiving housing benefits are now more reluctant to do so.

However, recent research carried out by The Residential Landlord’s Association[1] found that the new system in which tenants receive their benefits money directly, is causing frustration amongst landlords, and could even lead to landlords refusing to let to tenants who are receiving benefits in the future.

Across the UK, 4,739,427 people receive housing benefits, and 1,497,893[2] of these people are reliant on private rentals. However, with the reintroduction of the Right to Buy scheme in the November Autumn Statement, it is likely that this figure will increase, as local authority housing stock drops even lower. Over 200 households a day have registered their interest in the Right to Buy scheme since its introduction in November, with the main areas being Birmingham, Leeds, Sheffield, Southwark and Greenwich[3]

Key findings

The map reveals where in the UK the changes brought about by Universal Credit are likely to have the least and greatest impact, depending on the percentage of benefit claimants who are reliant on the private lettings industry:

Areas with the lowest percentage of claimants reliant on the private rental market:

  • City of London – 2% of the benefits receiving population (19 claimants)
  • Shetland Islands – 37 = 4% of the benefit receiving population (37 claimants)
  • Islington – 10% of the benefits receiving population (2,899 claimants)
  • Aberdeen City – 10% of the benefits receiving population (1,489 claimants)
  • Southwark – 11% of the benefits receiving population (3,930 claimants)

The Shetland Islands (884 overall), Orkney Islands (947 overall) and City of London (1,002 overall) have the smallest number of benefit claimants overall, so it is no surprise that the City of London and the Shetland Islands claim the top spots in the lowest percentage of claimants reliant on the private rental market. Southwark could be a figure which will increase over the next few years, as more and more of the existing local authority housing is purchased through the Right to Buy scheme, meaning many new claimants may find themselves reliant on the turbulent private lettings sector.

Areas with the highest percentage of claimants reliant on the private rental market:

  • Blackpool – 72% of the benefits receiving population (13,613 claimants)
  • Torbay – 68% of the benefits receiving population (9,114 claimants)
  • Tendring – 65% of the benefits receiving population (8,041 claimants)
  • Castle Point – 63% of the benefits receiving population (2,786 claimants)
  • Bournemouth – 62% of the benefits receiving population (10,454 claimants)

In Blackpool, a huge 72% of the town’s 18,886 housing benefit claimants rent a privately owned property. If landlords in this area are nervous about the changes and choose to withdraw from offering their properties to tenants who receive benefits, Blackpool council could potentially have 13,613 household to home, which would have a huge impact on the area’s housing stock!

It is interesting to note that all of the councils in the top five are coastal, whereas the lowest five are all inner city areas.

Adam Male, Co-Founder of Urban.co.uk comments:

‘The introduction of Universal Credit and the uncertainty surrounding it is definitely causing concern for many landlords. However, it is important to remember that there will always be a requirement for social housing, and the changes to the social housing landscape may offer many landlords light at the end of the gloomy tunnel.

Letting property to tenants on benefits is a very different kettle of fish to a private tenant, but it’s not a painful system. And when done correctly, can lead to a great long-term tenancy! Universal Credit will definitely change things in the short term, and it is true that whilst the system finds its feet and tenants get used to being in full control of their own money there may be some bumps in the road, however the figures speak for themselves – the system is reliant on private landlords, and as long as they are supported, they will continue to support the system.’

[1] Residential Landlords Association, April 2016
[2] Housing Benefit claimants by Region and Local Authority: by Tenure and Passported Status: November 2015
[3] Department for Communities and Local Government, December 2015

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