A Scottish Councillor and the Chief Executive of the SFHA have voiced their concerns regarding the impending changes to the welfare system (via Universal Credit); fearing that it could leave some city housing associations struggling to survive.
When the Universal Credit system goes live, in October 2013, payments will be made directly to tenants and it will be up to them to pay their rent or not; applying right across the board to local authority tenants, housing association tenants and tenants in the private rented sector.
This marks a significant change from the current system, in which 96% of all Scottish housing association tenants currently choose to have their rent paid direct to their landlord.
Coupled with the ‘bedroom tax‘ (whereby benefits will be reduced if a tenant is deemed as “under occupying” their home) and a new “Household benefit cap” due to come into force next year; could see some low income households see their benefit payments reduced by as much as £80 per week.
New Housing Convenor, Cllr Cammy Day, highlights that the combined effect of the benefit cuts and the end of direct rent payments to landlords could lead to “a massive hit” to the incomes of smaller housing associations; as their tenants will find it much harder to make ends meet.
He said: “These changes are a concern. The new Welfare Reform Bill is going to hit the housing associations hard.
“For some smaller housing associations their rent income is almost their only resource. When housing benefit is paid direct to tenants – that’s going to cause some problems for people.
“This is because people will have other priorities. People are already suffering under the cuts and if your benefit cheque is given to you directly you might well have other priorities that are more pressing than paying your rent.
“Now of course I would encourage people to pay their rent, but I appreciate that people have got competing demands on their limited resources.
“Someone from one of the bigger housing associations in the city has said to me that in their opinion some of the smaller ones could go to the wall, because their income will be massively hit. So, I am very aware that there are constraints on the housing associations. “
The Scottish Federation of Housing Associations estimates that 1 in 7 Scottish housing association tenants will be affected by the welfare reform. They also claim that 40% of tenants of working age are already finding it difficult to manage their finances; even before the welfare cuts come into force.
Furthermore, the Chief Executive of the Scottish Federation of Housing Associations Mary Taylor has confirmed that the sector expects the impending welfare reform changes will put the income of housing associations at risk.
She said: “The SFHA sees the future income of housing associations being put at risk by the introduction of Universal Credit later next year, by paying rent support direct to tenants when 96% of tenants choose to have their rent support paid direct to the landlord.
“We are working with the Department of Work & Pensions, the Scottish Government and others to minimise the risks and mitigate the impact on tenants and landlords. “
Dunedin Canmore Housing Association, Edinburgh’s largest association, are the only landlord north of the border to take part in the benefits reform pilot scheme; where around 2000 of the Housing Associations tenants will take over the responsibility for paying their rent from August.
Director of Housing, Graham Russell described the impending changes as the most profound he’s seen in more than thirty years in the sector.
He said: “We’re different in Scotland, because the average size of a Housing Association is comparatively small. The average size of a housing association in Scotland is perhaps about 800 houses with maybe about 12 members of staff.
“We’re in a different league from that. We have more than 5000 properties, but as housing associations we have one common purpose which is to provide accommodation for those who would otherwise not be able to afford it.”
“I don’t know what the specifics of other housing associations are, but most associations in Scotland rely on housing benefit for about 70-80% of their income.”
He went on to say: “I am worried. When there is a roll out of Universal Credits, if you are a council tenant and you don’t pay your rent, you will just go through the normal process of the council trying to recall the money from you, or a debt recovery process.
“What the end result of that will potentially be is more and more people up for eviction and potentially homeless.
“So there’s a huge concern that through the housing associations and through the council, that the new benefit reform from the Tory government is going to end up with places like Edinburgh having some pretty harsh homelessness figures.”
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