Private Tenants and ‘Perverse Incentives’ in the Housing Benefit Scheme

Abstract

The authors examine whether private tenants receiving housing benefit have sought to take advantage of the perverse incentives which exist in the scheme. They look at recipients' reasons for moving to their present accommodation, whether they shopped around for accommodation, whether they moved upmarket to better accommodation, and whether they paid a premium for their accommodation compared with nonrecipients. It is concluded that, despite the perverse incentives, recipients had not generally moved to take advantage of the scheme, had shopped around for accommodation, and were not paying a ‘housing benefit premium’. Although some recipients were paying over the odds for their accommodation this reflected their poor position in the housing market compared with nonrecipients rather than a deliberate attempt to take advantage of the scheme.