Property News Desk The Government has vowed to crackdown on excessive housing benefit payments in London, with Yvette Cooper the Work and Pensions today announcing plans to cap the practice of families renting out homes in London's most luxurious postcodes costing the taxpayer up to £2000 a week in housing benefit in some cases.
Due to the chronic shortage of council homes in the capital, the private sector is being used to house families, with The Times reporting that private landlords setting "rents £1 to £2 below the maximum allowed by the Department of Work of Pensions which has led to rents of almost £2,000 a week".
Westminster Council one of the councils which as seen its housing benefit rocket with 26 families currently living in accommodation costing £1,600 per week, and 900 families on £500 a week rents. Westminster has written a letter to the Secretary of State which underlines the councils concerns at the current system:
"We are, therefore, extremely concerned that the current local housing allowance system fails to offer taxpayers value for money.
Indeed, a system which can support families to live in accommodation costing at least £500 per week, which makes it beyond the reach of an estimated 96% of working households in the UK, should be regarded not only as unsustainable but wholly unfair and plainly wrong."
Westminster are requesting from the Government that:
"1. To give local authorities the power to influence and determine where residents who receive the local housing allowance are placed to deliver improved value for money for taxpayers and a system which is seen to be fair.
2. To undertake a comprehensive review of the “broad market rental area system” with a view to reducing local housing allowance rates. "
Currently the housing benefit for the whole of the UK is estimated to be £17 billion with projections for 2011 showing this figure above £20 billion.
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