In Focus (2024 Qtr 1): Universal Credit, LHA & the 2024 Budget

Introduction

Each quarter the NRLA runs a consultation with landlords across England & Wales. This consultation took place during March and early April 2024. Over 600 (685) landlords took part. Surveys were conducted online. 

Topics covered included:

1. Universal Credit
2. Local Housing Allowance
3. The Budget
4. General Election 2024

Universal Credit

The proportion of landlords who let to Universal Credit claiming tenants continues to grow - for the second year over 40%* of landlords stated they let property to this group of tenants. 

There is evidence of progress in the DWP performance metrics which matter to these landlords. For example:

1. The proportion of Universal Credit tenants falling into arrears after making a claim was DOWN
2. The proportion of claims settled before arrears exceeded eight weeks or more  was UP
3. The proportion of landlords reporting it easy/very easy to settle rent support claims was UP

However this not to say there is no room for improvement. For example (3) above - just 13% of landlords supporting tenant claims reported an "easy/very easy" process.  

Landlords are also stepping in to provide financial support to claimants. Over 40% (47%) of landlords who were aware their tenants needed extra help had offered support at their own cost. For example:

• Providing temporary support through rent reductions or rent windows 
• Writing off rent arrears

Local Housing Allowance (LHA)

LHA rates are used to calculate the housing benefit a tenant may claim. While the actual benefit paid tapers with income, LHA rates vary according to location.

Most landlords (89% of this sample) do not let property at LHA rates. Those that do let at these rates do so for many reasons: the meian reason however is the social good of providing a home at this rent level.

Landlords were asked about the likely impact of the LHA increases which came into operation in April (i.e. following the fieldwork for this consultation).    

• Over half of landlords who rent at LHA rates stated they would increase rents above the new level once the current tenant left
• One in five (22%) stated they would sell the property once the current tenant had left
• Just 15% said they would continue letting at LHA rates when time came to look for a new tenant. 

The Budget & General Election

When the fieldwork began for this consultation the spring Budget had just been unveiled whilst there was only the anticipation of a 2024 General Election. This consultation asked landlords about both events - one past, the other forthcoming. 

On the Budget there were several changes which could have an effect on landlords and the Private Rented Sector (PRS). These included more changes to Capital Gains Tax (CGT) and changes to the holiday let tax regime.

Landlords told us that, for many, the CGT change could incentivise property sales: One-in-five landlords who had no previous plans to sell property stated they would now at least consider selling property as a result of the announced changes.

In terms of the General Election, whilst landlords were not asked to state their Party preference, they were asked about the key issues which would influence their view:

A large proportion of landlords stated their votes were "up for grabs". Economic competence; the NHS and taxation were the three key issues for landlords other than the policies which would directly affect the PRS: Over 75% (81%) of landlords also stated party policies towards the PRS would have an influence on how they would vote.