'Opportunistic' millionaire landlords 'FLEECING' taxpayers for £9BN in housing benefits
AN INVESTIGATION has revealed that more than 200 millionaires have been created through a legal loophole which allows “opportunistic” landlords and agencies “to fleece” a fortune in housing benefits from the taxpayer.
The government has vowed to crackdown on the scheme which is being investigated by a group of London borough councils.
The revelation is part of a Channel 4 Dispatches documentary, being aired tonight, examining how private landlords are now the fastest growing provider housing for housing benefit tenants, receiving an estimated £9 billion a year from the housing benefit budget.
The revelation has been taken as evidence by campaign groups that more needs to be done to end the massive waste of taxpayers money in the housing benefit budget.
Jonathan Isaby, chief executive of the TaxPayers' Alliance, said: "The housing benefit bill is a huge burden on taxpayers and they will be absolutely furious to learn that they are being fleeced by opportunists.
“This also goes to show that not nearly enough is being done to relax planning and allow more houses to be built, which is the root cause of high prices and big housing benefit bills."
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Using Freedom of Information data from the country’s 60 biggest councils, Dispatches has revealed that more than 200 landlords and letting agents across the country have received £1 million or more in housing benefit payments in the last three years.
The investigation uncovers how a number of letting agents based in North London have used legal loopholes in the housing system to receive millions of pounds a year in housing benefit.
The scheme involves converting hundreds of family houses into properties that comprise of multiple tiny units.
Each of these units has a small shower room and basic cooking facilitieswhich means that they could be eligible for the higher rate of housing benefit, which can often be more than double the rate of a room in a fully-shared property.
One case study in Brent shows a letting agent is collecting nearly £70,000 per year and another nearly £80,000 per year in housing benefit from two properties.
One of the letting agents is believed to have almost 100 of these properties across the capital and has earned at least £2 million in housing benefit over the past three years.
In addition to these funds, in attempt to alleviate the housing crisis, local councils are offering private landlords and letting agents financial incentives to rent their properties out to tenants on housing benefits.
Another letting agent secretly filmed receive approximately £800 to 1000 per tenant as an enticement from local authorities to secure rooms for housing benefit tenants.
Dr Victoria Cooper, lecturer in Social Policy at the Open University told Dispatches that “approximately 40 per cent” of the housing benefit budget is spent on the private rented sector.
A group of London councils including Greenwich, Hackney, Haringey, Lambeth, Lewisham and Southwark have become increasingly concerned by this model and have received funds from central government to investigate further.
The consortium tagged as the London Lockdown project plan to inspect 1,500 letting units that attract more than £15m a year in housing benefit.
The housing benefit bill is a huge burden on taxpayers and they will be absolutely furious to learn that they are being fleeced by opportunists
The Association of London Environmental Health Managers which is co-ordinating the investigation believe this is just a “small proportion of the total number” across the country in what they describe as a “rapidly expanding business model”.
The Government has also promised to take action to close down schemes with a new Housing Bill.
A Department for Communities and Local Government spokesman said: “The Government is determined to crack down on rogue landlords or letting agents and the Housing Bill will introduce banning orders, fines and a database for the worst offenders.
“This is backed up by £5 million for councils so they can bring an end to tenants living in terrible conditions in the name of profit.”
Lawyers acting for the agents told Dispatches: “Our companies manage a number of properties in London and across the UK. Each one is subject to the regulation of the appropriate local council, is inspected by them and subjected to independent certification generally.
“We have an excellent working relationship with each council. They said they refute all the allegations and would ‘continue to work with local authorities to provide much needed accommodation.”