How welfare reform will affect your buy-to-let

Tom currently receives £110 a week from Gravesham Council to pay for his one-bed flat in Gravesend, Kent. But his stipend will fall to £68 next year, as the coalition’s cuts in local housing allowance (LHA) take effect. His landlord, Marion Money, cannot afford to cover such a hefty shortfall. “The reality is he’s going to move on,” she says.

Such dramas will play out across the country over the coming year. Gravesend is in the London commuter belt, so Ms Money believes she can easily fill the flat at the previous rent from the private market. But landlords in more remote towns without strong private sectors may find it tougher. Faced with a choice between a void and a rent cut, most landlords will take the rent cut - dragging down rents even for those landlords who have no exposure to housing benefit.

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NetRent Comment

This article explains how the new rule changes will potentially affect all landlords, even those with no exposure to tenants claiming benefits, and is well worth a read.