How Councils are contributing to homelessness

My local pub has an extraordinary notice on the door.  It says “No children in either the pub or the garden, no exceptions.  Dogs welcome!”  Most discrimination is illegal now but child hating, it seems, is still allowed.  So is discrimination against tenants on housing benefit.  Almost every local newspaper, especially those in the poorer areas, carry advertisements from letting agents with the words “No Housing Benefit” or “Working Tenants Only”.  This seems horribly unfair to the prospective tenants who are excluded but this prejudice is completely understandable.

Over the last few years, more and more landlords have stopped taking tenants on housing benefit.  The problem started when councils started paying benefits to the tenants instead of the landlord.  Some tenants inevitably spent their rent money on other things and arrears started to mount up.

A second problem was the maximum rent levels that were introduced.  In many areas, these are significantly below market rents and tenants were forced to make a choice between leaving their home or making up the difference themselves.  Many could not afford to do so.

The biggest problem by far, however, is the behaviour of council housing officers.  It is now common practice for them to advise tenants whose lease is coming to an end to refuse to leave the property and to wait instead for their landlord to go to court in order to evict them.  Only when they are out on the streets will the council take responsibility for re-housing them.

To my mind, it is outrageous that a public official should actively encourage tenants to break the terms of their tenancy agreement in this way.  The consequence to their landlord can be devastating.  The legal process of evicting a tenant costs several thousand pounds.  In addition, the tenants often stop paying their rent during this period so they will lose several months income.  Not all landlords are multi-millionaire investors.  A lot are ordinary people who own a single investment property.  Many of them are elderly and have bought the property to provide an income during their retirement.  For them, the loss of rent and legal costs can be devastating.

The impact on the tenants must also be considered.  Many literally end up on the streets.  Even the lucky ones usually end up in bed and breakfast-type accommodation which is no substitute for a proper home.  They are unlikely to be able to pass references to rent another privately-owned property and there is a very long wait for council accommodation in most areas.

Even the council only gets a very short-term benefit from their policies.  In the long run, this immoral behaviour will only drive up their housing costs.  In the short-term, bed and breakfast accommodation is more expensive than permanent accommodation.  In the longer-term, the more often housing officers encourage tenants to wait to be evicted, the less prepared landlords will be to consider housing benefit tenants in the future and the law of supply and demand will drive up rents still further.

Specialist landlords have already set up businesses to exploit the system.  I know of one who bought a derelict one hundred bedroom hotel with the specific objective of converting it into low budget B&B accommodation to rent out to the local council at £X per room per day.  Apparently it has been the best investment in his entire property portfolio.

Other specialist landlords with multiple properties are specifically targeting the housing benefit market.  If you own twenty properties, you can afford to cope with one or two of these tenancies going wrong at any time.  The income from the rest makes up for it and the overall yield is acceptable.  However, for landlords with just one or two properties, it is too risky.

For the sake of landlords, tenants, council housing budgets and decency and fairness, I would like to see an immediate ban imposed on housing officers advising tenants to stay on in a rented property beyond the end of the tenancy.  In the longer term, we also need to see improvements to the eviction process so that landlords can regain possession of their properties more quickly and more cheaply.

The permanent solution, of course, is more public housing but that remains a pipedream.

Adam Walker is a management consultant, business sales agent and trainer who has worked in the property sector for more than twenty-five years.