Benefit payments to private landlords have doubled to £9.3bn during the past decade as tenants on low incomes shift into the privately rented sector.
The growth in private renting has driven a large rise in the government’s housing benefit bill and prompted calls for the construction of more social homes, which offer lower rents.
Almost one in three housing benefit recipients, or 1.5m households, now lives in a privately rented home, up from a quarter in 2008, according to government figures sourced by the National Housing Federation, which represents housing associations.
The total benefits bill has exceeded £24bn for the past four years using 2016-17 prices, while, before 2006-07, the total bill had never exceeded £18bn, according to official figures.
If all tenants receiving housing benefit were in social homes, the government would save £2.2bn a year, the NHF said.
“It is madness to spend £9bn of taxpayers’ money lining the pockets of private landlords, rather than investing in affordable homes,” said David Orr, chief executive of the NHF.
“Housing associations want to build the homes the nation needs. By loosening restrictions on existing funding, the government can free up housing associations to build more affordable housing at better value to the taxpayer and directly address the housing crisis.”
The average weekly housing benefit award is £89 in the socially rented sector but £110 for private rents, the NHF found, using data from the Department for Work and Pensions. In London, the difference is even starker: private rents are 51 per cent higher at £188.
Despite the rise, research from the Chartered Institute of Housing last year found that housing benefit had failed to keep pace with increases in private rents in many areas, leaving under-35s, in particular, at risk of homelessness.
A government spokesman noted that the proportion of housing benefit spent on private rents had declined from 40 per cent to 37 per cent since 2012.
“The reality is we have taken action to bring the housing benefit bill under control,” he said. “We are also committed to building the homes this country needs and investing £8bn to build 400,000 more affordable homes.”
Richard Lambert, chief executive of the National Landlords Association, said: “Housing benefit is not a subsidy to landlords; it’s a support for tenants to ensure they can pay for their housing.
“What we should all be talking about is the failure of successive governments to adequately allocate its housing budget and to incentivise the building of new homes.”
Housing associations, non-profit groups that construct the vast majority of the UK’s socially rented housing, faced a series of blows from David Cameron’s Conservative government, including a reduction in the rents they can charge.
In 2015, the Treasury announced that it would require them to cut rents by 1 per cent a year for the next four years, rowing back on an earlier commitment to increase rents in line with inflation. They also face an extension of the Right to Buy programme to allow tenants to buy their homes at a discount.
But the sector is seeking to regain the initiative under Theresa May, prime minister, as the government attempts to increase housing construction.
Private landlords, meanwhile, face a more challenging environment after a stamp duty surcharge was imposed on second and additional homes this year, and mortgage tax relief is due to be reduced from next year.
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