Wednesday, November 17, 2010

Lies, damn lies and even more lies

When the government launched its cuts to housing benefit, one of their key arguments was that rents paid by Housing Benefit were rising as the non-benefit rents were falling. To quote Ian Duncan Smith

We now know that, according to the Office for National Statistics, the private marketplace in housing - Labour Members are completely wrong about this - fell by around 5% last year. At the same time, LHA rates, which the previous Government had set and left to us, had risen by 3%. There is thus a 7% gap with what is going on in the marketplace.
This was a difficult argument to counter, as it seemed to support the argument that rapacious landlords were ripping off the taxpayer - which at least makes a bit of change from the tired argument that it is all down to lazy, good for nothing, welfare scroungers.

What we want to do, by working with councils, is to drive those rents back down. The purpose of these changes is to give a real impetus to getting the rents down to make affordable housing more available in some areas.
Essentially, the Tory plan is to use market forces to force rents down - a no-control form of rent control. Of course, if you want a market solution to housing costs, increasing the supply would work rather better than an unproven attempt to nudge rents downward. An attempt probably doomed to failure, as if those benefit claimants can be evicted wholesale, great swathes of London can be re-let at commercially-viable rates to non-benefit tenants.

Over at Inside Housing, Jules Birch has been looking into the claims about the increase in rents. Last week, he spotted that the DWP's own figures didn't support what was being claimed and when he asked for the detailed report quoted in the House, nothing substantive was forthcoming beyond a press release repeating those figures. While he found some limited justification for claims that LHA rents were increasing, they were actually increasing more slowly than those for private regulated tenants and only slightly faster than rents for those in the non-LHA deregulated markets. In fact, the biggest increase in LHA award went to housing association tenants.

Landlords are hopping mad over the implication that they are ripping off the system. The British Property Federation published a detailed rebuttal last week that used the DWP’s own figures to show that almost 70% of the increase in the housing benefit bill is down to an increase in the number of claimants rather than rents. Of the rest, 17.7% is due to the increase in social sector rents (not just actual increases but the effect of stock transfer too) and only 13.2% is down to increased private rents.
He returned to the fray this week, with more detail on the issue, confirming that the statistics quoted by the sainted Ian Duncan Smith were not provided by the reliable ONS, who don't produce rent statistics at all, but from a rental index produced by, a website belonging to the publishers of the Daily Mail, no less. The figures are based upon advertised prices for new lettings - not actual rental prices - and Birch calls into question their sample size, as the average rent in March 2010 was £820, double the average amount of Local Housing Allowance paid. Essentially - and unsurprisingly - works in a different sector. To further expand, he quotes the site's own guru, who comments thus on private sector rents

Stock levels in both the home buyer and rental markets are dwindling, and would-be buyers are still having a hard time getting mortgages. This is all putting increased pressure on the available rental stock which pretty much makes it a landlord’s market at the moment as they can effectively name their price.
This does not bode well for the government's plans to force rent down, as if the market is undersupplied, then other tenants will be ideally placed to take the tenancies vacated by housing benefit claimants evicted for non-payment (and also, under proposed new rules, now regarded as intentionally homeless, just to add insult to injury).

The time has come for the Secretary of State to be called back to the House to explain why he has misled the Commons over the probity of his statistics, which have been comprehensively rubbished by a genuine expert in the field. An apology is due.

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