Do you rent your home from a private landlord? Plenty of people do: 4.5m households, in fact. Indeed between 2002 and 2016, the private rented sector doubled in size – from 10% of households, to 20%[i]. In contrast, the social rented sector has nearly halved over the same period , from 31% in 2002, to just 17% today[ii]. Getting a house or flat off your local council or a housing association is becoming progressively more difficult. You might be tempted to think that that doesn’t really matter. After all, surely rented accommodation is still rented accommodation whether your landlord is from the private sector or the voluntary/statutory sector? Sadly, if you lose your job you’ll find out that that is not the case.
The problem is finding a means of paying your rent. Many people assume that one of the main benefits of renting over taking out a mortgage is that if you should become unemployed then your rent will still be paid by the government. And it is certainly the case that any tenant in social housing shouldn’t have to worry about losing their home on top of losing their job, because they’re entitled to claim housing benefit to cover the cost of their rent if they become unemployed.
Of course, private tenants are entitled to claim housing benefit too, but that doesn’t mean that they won’t lose their home. That’s because many private landlords make it a condition of their tenancy agreements that tenants are not in receipt of housing benefit. So if you try to pay your rent with housing benefit you may well find your tenancy is terminated by your landlord.
If you then try and find another tenancy in the private rented sector then you’ll find yourself coming up against the same barrier – if you’re in receipt of housing benefit then you won’t even be considered for most properties.
It’s important to say is that apparent injustice this is not solely down to the whims of private landlords. Many properties are bought with buy-to-let mortgages and virtually all mortgage companies will include a condition in their mortgage agreements prohibiting the landlord from letting the property to anyone in receipt of housing benefit. Not only that, but all landlords have to insure the building that they are renting out. Many also choose to take out insurance against rent payments being missed. But like mortgage companies, insurers also typically include clauses in their agreements that prohibit a landlord from renting the property out to someone in receipt of housing benefit. So if a landlord knowingly houses a tenant in receipt of housing benefit then they potentially invalidate their insurance, and can have their mortgage cancelled.
But if housing benefit will cover your rent in full whilst you’re unemployed then why is there any need for such rules? Surely the government is a far more reliable rent guarantor than any individual? Sadly, the reason for the ban can be boiled down to one word: prejudice. Mortgage and insurance companies have a view of housing benefit claimants as ‘undesirables’; feckless and work-shy spongers off the state, who are more likely to damage a property, and who will ‘lower the tone’ of an area.
But even if there was any evidence to back up these gross generalisations – which there isn’t – these discriminatory rules don’t just apply to unemployed people. Around one-in-four of housing benefit claimants are actually in work, but don’t earn enough to be able to afford the full rent and so are eligible for a subsidy towards it from housing benefit. And of course many pensioners receive housing benefit too. Yet if a private landlord lets their property to any of them they will potentially find themselves unable to get a mortgage or secure insurance too. Small wonder therefore , that people in need of housing have such a hard time accessing the private rented sector.
But it doesn’t have to be like this. Housing associations can secure mortgages to build homes for people and have no problem securing buildings insurance for them once they are built, despite nearly half of their tenants being in receipt of housing benefit. And in 2015 they made a combined annual surplus of over £3bn[iii], so the bar on renting properties to people in receipt of housing benefit clearly has no economic justification. Insurers and mortgage companies could lift it if they wanted to.
The point here is surely that people should be judged according to their actual behaviour rather than prejudiced misconceptions that tar vast swathes of ordinary people with the same brush. At a time when it is increasingly difficult for people to find secure work, and when access to social housing continues to be problematic, it is all the more important that the growing private rented sector plays its part in solving the housing crisis. It cannot do that whilst prejudice continues to hold sway.
Alan Fraser is Chief Executive of YMCA Birmingham
[i] The English Housing Survey 2016, Private rented sector – https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/627686/Private_rented_sector_report_2015-16.pdf
[ii] The English Housing Survey 2016 , Social rented sector – https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/626902/Social_rented_sector_report_2015-16.pdf
[iii] “Sector surplus reaches £3bn”, Inside Housing, 17/02/2016 – https://www.insidehousing.co.uk/news/news/sector-surplus-reaches-3bn-46236