One controversial and difficult measure taken by the Coalition Government is the limit on housing benefit.
Housing benefit is paid to those, mostly – but not exclusively – out of work, who cannot afford their rent. The bill has been getting out of control because private rents have been rising – on the back of rising property prices. The taxpayer is paying.
This is a big problem in inner London but it affects some local residents whose benefit exceeds the Government’s proposed maximum level for this area. There are particular problems in Whitton where rents are assumed to be at Hounslow levels but are actually higher.
The London Mayor, among others, has talked about ‘ethnic cleansing’, which is emotional nonsense. But there will be a serious problem for people who cannot cover their rent.
What can be done? The Government is trying to get landlords to set lower rents by limiting benefit. There is undoubtedly some abuse by landlords but, mostly, rents reflect an inflated market. That is also why tightened rent controls are unlikely to work and could lead to a decline in rented property which we badly need.
Commonsense suggests that the best solution is a bigger supply of affordable – social – housing for those on low incomes. But the ferocious planning battles we see locally whenever new social housing is involved – and the lack of land for development – show the difficulty.
Despite the recession and the mortgage famine, London property markets are still dangerously inflated – affecting both house prices and rentals. Property taxation (like my Mansion Tax) could restore sanity but would be unpopular.
The London property bubble has created many millionaires but left poorer people unable to buy or rent without government subsidy. Hence the housing benefit crisis.