Tenant’s voice: Push off

Shereen (it’s her real name and she is happy to tell her story) has a goal in her life – to come off benefits and pay her own way in the world. She has an outgoing personality which she intends to put to good use by building a marketing business. She knows it won’t be easy, but she is attending training to prepare for the future. So just how realistic is Shereen’s goal?

Spurred on by the government’s review of working age housing benefit, and the July Green Paper, No one written off, I calculated how much Shereen needs to earn before she can declare her household a benefits-free zone. Challenge me if I’m wrong, but I think she needs about £39,000 a year before she floats off housing benefit.

Even more of a challenge is the fact that every extra £10 Shereen earns above £50 a week will increase her disposable income by just £1.

When she is earning £50 a week, she will be £45.70 a week better off than she is on income support. But if she increases her income to £200 a week, her disposable income will rise by only £68.91.

Shereen will achieve this because she values the notion of work as a model for Shaquone, and running her own business will bring satisfaction. But for most people with more mundane job prospects, are such small increases in disposable income any incentive?

Shereen is not an isolated example. Local authorities are encouraging more low-income families into private renting as a solution to their housing needs. Brent council alone is looking to house about 400 families a year by this means. And our experience is that private tenants want to work every bit as much as social housing tenants.

If initiatives to tackle worklessness continue to be directed at the social rented sector, we will merely be transferring widespread worklessness to large areas of the private sector. We must start thinking of support for tenants across all sectors.

With market rents for family-size homes at an all-time high, will we ever crack the problem by reforming the benefits system? Do we need to acknowledge that it doesn’t make sense to let housing benefit ‘take the strain’ in the words of bygone housing minister, Sir George Young? Isn’t it better to refocus on investing in bricks and mortar?

If a flat like Shereen’s was purchased by a social landlord with a 100 per cent mortgage, the repayments (at 6 per cent) would be around £270 per week; £8 a week less than the current rent. If the RSL charged Shereen an intermediate rent of, say, £118 per week (roughly 20 per cent more than a social rent) Shereen will cease to rely on housing benefit by the time she is earning £20,000 or so.

Importantly, all the money she pays in rent, whether through housing benefit or her own earnings can be reinvested to help the next family. Leave the system as it is and Shereen’s housing benefit, from now until she’s a big time earner, goes straight into the pocket of the private landlord with no guarantee that it will help future housing need.

Jacky Peacock is director of Brent Private Tenants’ Rights Group.