Croydon's minority groups will be hit hardest by benefit cuts, says community leader

“@swsquires1:

And yes I would love to see the Housing Market collapse. Wages aren't going up, so prices must come down for this crisis to end.

Which means, as you rightly say, we need a mass sell-up.

Which makes this Dilnot thing all the more wrong. The current Govt design costs £1b, and only protects the inheritances of a wealthy few. Everyone else will have to pay up as before.

I think we all agree there are better things to spend that £1b on then a bunch of wealthy pensioners. Like more free school meals for the many many people struggling to put food on the table during this current Job-shortage.”

“@swsquires1: Yes, that is what a regional cap is. In some parts of the map the cap may well be as low as £20k pa.

No I do not support regional pay in the Public Sector. For some towns all that is left keeping them from collapse is Public Sector wages. Thatcher wrecked the rest of their incomes, so that is all they have left now. Making those wages lower WILL destroy the economies of entire towns.

The point you've got wrong is that £26,500 is the average wage for 1 PERSON. A couple could be on £50kpa. And the Benefits Cap is a Household Income thing. So your 2 workers both on a lowly £19k pa each still being in more than an unemployed family. So...

Yes, I do think a Benefits Cap set at £35k pa is too low for the London Area, yes I do think it's going to be seriously close for Croydon as to whether people can survive or not, and no I do not think that is an insult to the many hardworking couples earning £35k pa or more BETWEEN THEM ( and they will no doubt get Child Tax Credits, Child Benefit, maybe Working Tax Credits as well... ).

I'm afraid it is you that is out of touch. Feel free to check what I am saying. You'll find it's accurate.”

“Chris,
I think it is highly unfair to the majority of hard working people to say that getting the equivalent of £35k a year is a right kicking. I know many families who struggle by on a lot less than that with no benefits. That is a total insult to them.

Given that you like the idea of a regional cap, I assume this means that in cheaper parts of the country will will also give a much lower cap, say £20k to reflect lower rental prices. Also I assume you also support regional pay levels in the public sector which again will see pay reduced outside of London.

If you are honestly saying that £35k is not enough when the average UK salary is £26,500 you are out of touch with reality.

A final point regarding the potential for landlords going bankrupt. I would have thought that this was the ideal situation. If landlords find that owning multiple homes to rent does not provide a satisfactory yield they will sell. An increase in properties being sold will push down prices. When people buy at a lower price and with lower rents achievable we have exactly what you want. Simple supply and demand.

We currently have record low interest rates and record low mortgages are being offered on the market. The economic model for renting involves covering mortgage interest (can offset against tax), a yield on investment and hopefully a capital gain through increasing house prices. If anything the ideal scenario is a collapse in house prices as this will force down rental income.

Regarding Croydon, this is one of the cheaper London boroughs and a nice detached 4 bed house with a big garden can be found quite easily for £500 per week. My neighbour in fact is a senior executive at a large multi national. He has been moved here by his company from overseas so is being put up in a large 4 bed house (him and 4 kids). This top executive is living in a house with a rent of about £450 per week. I am sure he would be shocked to know there is such uproar over a limit higher than that. Perhaps he should go back to the Board of Directors and ask for an upgrade...”

“@squired:

Any benefit cap is fairer for working families. No-one is denying that. The clincher is in how it is applied.

The Torys have a blanket cap that means people in London are about to take a right kicking. It's too simplistic.

Labour want a regional cap. We feel this is fairer as it does not cause the 'cleansing' of poor people from more expensive parts of London. It's still a cap, but will take into account important factors like London Weighting.

In Croydon it's so close to the line I don't know how well we'll do. I expect problems sure, but disaster might be averted if The Council succeed in buying up these new homes in South Norwood for Social use. This one isn't immediately obvious.”

“@squired: Yes, that is correct. It's the working people that need to negotiate more to bring rents down.

But they won't. Which is why I believe rent control is needed now. As does Labour, with our Living Rent initiative.

But Landlords can go bust. If they overcommit on the mortgage they may well have to sell up if their rent is too high, they can't lower it, and they can't find paying tenants. No business can run at a loss longterm.”

“Chris - it very much depends on the landlord and the way they have financed their property ownership and how long they have owned it. If you have a recently purchased property on a 95% mortgage, then you are looking for a monthly rent that covers the mortgage, but every property owner will have differing levels of debt. For example, if I had bought a 2 bed flat in central Croydon in the mid 1990s (when a number of new builds went up) I would have paid something like £70k. That flat would now be worth closer to £200k and could get a monthly rent of something like £800. If I was the owner of one of those flats I would not go bust if I'd previously had council tenants that could no longer pay. However, if I still couldn't find someone to rent at £800 I would need to lower my rate. Yes, my yield would drop, but I wouldn't go bust.

If people have speculated on expensive properties and have large mortgages on them, that was the risk they took. If they can only get someone in their property for £200 less per month they will still take it (and have to cut back elsewhere) and if necessary seek to sell the property.

Yes, house prices have gone up. Rents have gone up too, but not in-line with house prices. In fact, yields on rentals are at near record lows I believe, so renting is not the money spinner it once was.

To reiterate, if a landlord is renting a property out for £600 a month and no-one in work is willing to pay it, then they will have to sell-up or lower the rent. It is that simple. Employed people are indeed part of what keeps rents high, but at the middle and lower end of the market a large number of rentals are subsidised by the government. These rates will indeed see deflation as a result of the government changes. That is good for poor people.

Whatever the argument, it still stands that some unemployed people are being subsidised to a far greater degree than is "fair". The changes being implemented by the government are fairer for working families.”

“@squired:

No. The reason why rents ( & house prices ) are so high is that the public pay up.

If house prices are higher rents HAVE TO BE higher or buy-to-let systems stop becoming viable and Landlords go bust. Housing Prices going up also forces up rent, basically.

Some landlords can't just lower their rent. They paid too much for the property. And all the time people are handing over the cash rents will stay high. Which means the minority unemployed will remain at the mercy of this market.

And with these benefits cuts coming in expect those poor to be even more in the poop. Until the market comes down ( as in, employed people refuse to pay such ridiculous prices for property ) rents will not come down.

Simply messing with Housing Benefit will not even dent the real part of the market that dictates price for the rest of the market. It's employed people that keep housing prices ( & subsequently rents ) high. Not the unemployed and disabled.”

“@in_Despair_01:

How about we let La Fantastica choose to answer if she wishes. Many poor people need benefits to help them get by in Croydon. There is no shame in it. It's just how it is.”

“Rent is driven by the simple rule of supply and demand. If landlords suddenly find their properties empty because people can no longer afford them they will either have to drop their expectations or lose their income. For many landlords, particularly buy-to-lets, even having their property empty for a month or two would be too expensive.

It is great to sit there and moan about the excessive rents, but in part they have been driven by people knowing they can charge that much because the Government is willing to pick up the bill. Put rent up 10% - that's fine, the government will pay..... That sort of attitude will end as a result of these changes.

If people have to move somewhere else, then they have to move. I would love to live in Knightsbridge, but it is too expensive for me despite the fact I am lucky enough to earn way above the national average wage. Croydon is obviously further down the scale, but if people can't afford to live here they should move somewhere cheaper.”

“How very disgusting of you Chris Wilcox to assume LAFantastica receives any other benefits whilst in work!
I work 21 hours a week and earn just under 18k per yr yet I am not entitled to Working Tax credits or any other benefit handed out to those unemployed, as I apparently earn too much!!!
People who work are far worse off then those who dont - and you know what, I'd say thats Labour's fault as they are the ones who were in government for 13 years. The conservatives have had just under 3 years to try and make up for the mess Labour created.

YOU MAKE ME VERY MAD!!!!!”