Under the government’s reforms, the age threshold for the Shared Room Rate (SRR) in Housing Benefit is due to increase from 25 to 35 from April 2012.
According to Department of Work and Pensions statistics, approximately 166,930 are currently eligible for the SRR benefit. The reform will mean 260,330 Housing Benefit recipients between 25 and 35 years old will no longer qualify for their own flat or house, but would have to share accommodation instead.
Currently, the UK’s flatsharing population stands at 2,765,000. If all those eligible in the new age group took the benefit and moved into shared rented homes, this could rise to 3,025,330 – an increase of 9.4%.
The average UK rent for a flatsharer stands at £348 per month. Easyroommate.co.uk calculate that a 9.4% increase in the number of flatmates competing for the same level of accommodation could push rents as high as £381 pcm – on top of the current upward pressure on rent from indebted graduates and deferring first-time buyers.
Jonathan Moore, director of easyroommate.co.uk, comments:
“The private rental sector and the wider flatsharing market is already creaking under the strain of matching the demand for accommodation by thousands of frustrated first-time buyers.
"The flood of new flatsharers onto the market is going to drive up the level of competition for rooms even further. With public spending cuts squeezing families financially, we may see more families looking to rent out rooms, mitigating the effect slightly. But this increase won’t match the surge in demand.”
“For landlords, this is good news. Live-in landlords will be able to raise rents, pocketing an extra £30 a month. But current tenants will have a gloomier outlook. Residential property rents are already at record levels – and it looks like the cost of renting a room is likely to mirror that upwards trend. Current flatsharers will need to tighten their belts even further to cope with a rents hike.”
A £33 per month increase in rent means the average flatsharer will need to save the equivalent of:
- the cost of 12 pints of beer
- the average water bill and TV licence combined
- a weekly food shop
- monthly gym membership
- the monthly contract cost of an Iphone
However, despite the financial benefit landlords are set to see from increased demand, very few would want to rent rooms to tenants on Shared Room Rates. In a snap online poll of 313 landlords, just 17% would consider letting a room to a tenant on housing benefits.
Landlords’ main concern was flatsharers on benefits might be unable contribute to monthly utility bills (31%), while a further 24% were worried that they would not be able to terminate their tenure as easily.
Many landlords stated they do not need the additional demand. 15% of those polled said that they already had a strong enough supply of tenants without the extra stream of tenants on state support.
Jonathan Moore concludes:
“Many landlords simply see housing benefit tenants as a source of rent. But it is clear that amongst the majority, there is still a strong stigma attached to tenants on housing benefits. Although 99% of housing benefit recipients cause landlords no problem at all, landlords still view them as ‘problem tenants’.
"And with this reputation, many landlords will continue to pick tenants who don’t receive support from the state. It seems likely that the government may well find difficulty in housing an increased number of tenants on benefits in the flatshare sector.”
