As landlords, we need an honest debate about the benefit system
Following on from Benefit Street, and the headline story about the Ferguson’s serving notice on their tenants on Local Housing Allowance, we need to have an honest and balanced debate about benefits, in a similar fashion to Nick Robinson’s The Truth About Immigration.
Although it seems that in today’s multi cultural Britain, we are far removed from Enoch Powell’s Rivers of Blood speech on immigration, in a country with an economy still affected by austerity, it isn’t the same with benefits. It seems increasingly impossible to look at the subject of benefits objectively – public opinion seems to either come down strongly on the side of those who say that all benefit claimants are vulnerable, helpless poor who are being ruthlessly used as pawns by a government intent on the decimation of the most disadvantaged and those that say claimants, or at least a sizeable majority of them, are scroungers, stealing from hard working tax payers. Both of these arguments have some truth to them, while at the same time both are judgmental, damaging and wrong.
Vanessa Warwick recently said on Property Tribes, “All of us are only a P45 or a crisis away from needing state support.” Many of us who visit the LRS site could find ourselves in this position, and even the very best tenant could lose or have their income reduced, making them reliant on LHA. I am fortunate that this has never happened with any of my tenants, but if and when it does, like any good landlord, I am prepared to work with them to pay the rent – not to immediately serve notice on them!
I don’t have experience of letting to LHA tenants – but as a regular visitor to LRS and other landlord sites, I know a lot of landlords do have LHA tenants – including Paul Routledge – who I completely take my hat off to after having read some of his experiences – such as the tenant with severe alcohol abuse and mental health issues that he let to for nearly 10 years – putting up with all sorts of abuse and lack of rent but still making every accommodation for his tenant – until reaching breaking point! However, I did deal with benefit claimants a few years ago when I worked for a time as a floor manager at a job centre.
The vast majority of our customers (we were expected to adhere to customer service standards and not all visitors were current claimants) were perfectly normal, average people like any of us – they’d typically lost their job (this was when we were less than 2 years into the first recession), though some were longer term claimants – either pensioners, near pension age and unable to get another job, single parents or disabled – these people normally went about their business at the job centre with minimal direction from the staff, and when they did require help, were polite and reasonable.
When most people talk about problem benefit claimants, they are in fact talking about a minority within a couple of small groups who make up all claimants. While there is a public perception that Job Seeker’s Allowance (JSA) and other working age benefits make up most of the government’s benefit spending, around half the spend on benefits is in fact on pensions. Housing Benefit (surprise, surprise!) came next at around 27%, while income support came in at 11% with JSA at just under 8% – this information is taken from 2011-2012 DWP figures published by the Guardian. Another misconception is that you have to be out of work to claim Housing Benefit or LHA, when in fact around 19.4% of Housing Benefit claimants are in work (August 2013 figures from Inside Housing). Don’t forget that a sizeable number of pensioners will also claim Housing Benefit.
Where problem out of work benefit claimants are concerned, according to Wikipedia, “The DWP for England and Wales showed one third of the total number of claimants for JSA were persons having been convicted of a crime resulting in their act(s) having been recorded by the police authorities.” Other figures suggest that somewhere between 13 – 28% of incapacity and Employment and Support Allowance (ESA) claimants have criminal records. While it’s reasonable to expect a certain number of IB or ESA claimants to have serious drug, alcohol or mental health issues making them more likely to commit crime, the DWP interpretation of “criminal record” includes one off petty offences committed long before the benefit claim was made.
So if the vast majority of those on LHA are likely to be as good a tenant as the next person, why don’t I, as a landlord accept LHA tenants? Like most small landlords, I don’t take tenants who rely on benefit mostly because I simply haven’t got the resource to carry the risk, and let’s face it, there is a risk – the obvious one being rental arrears – both because a certain category of irresponsible LHA tenant prefer to spend rent money on other things, but also because I let properties in Greater London – a typical LHA ceiling of £700 (last time I checked) for a one bed flat in my general area would not cover my rent, leaving a tenant on a very low income to make up the shortfall. In the current property market, I am also fortunate that because I let small, well presented flats near transport links in Greater London, I have never suffered a shortage of available tenants – quite the opposite in fact – my longest void has been 2 weeks – my challenge was to get the property (which I’d just bought) ready for my tenants who were moving in on less than 2 day’s notice! My other reservation about taking LHA tenants is that as above, a small but very real minority of benefit claimants are also likely to cause criminal damage and carry on anti social behaviour.
Landlords who do take LHA tenants would say that the risk can be ameliorated by knowing the benefit system, getting a guarantor with RGI and carrying out due diligence – thorough referencing. As we all know, getting the right tenant is crucial to the success of the whole let. Where someone who has been on benefits long term is concerned, they may not have a bank account or normal credit facilities, meaning they don’t show up on credit reference checks. While a lifestyle search may not throw up any red flags, it is very easy to steal a claimant’s identity. Not only have claimants got regular mail from the DWP with confidential details going to their homes (which are more likely to be shared accommodation or have shared letterboxes), but national insurance numbers are used as a reference at job centres – while claimants are supposed to write this down, a lot of the time they simply quote it verbally – anyone listening can get both this and their full name – they can then easily find out where they live (if they don’t already know!). This is just one example of how the small but very real criminal element who claim benefits can trick a landlord into taking them.
Although I’m not likely to advertise the next property I let to LHA tenants, and while I agree with the extensive research that Iain Duncan Smith has undertaken with The Centre for Social Justice which, along with the current economic climate, has informed the government’s welfare reforms, I totally abhor the current fashion (behind TV programmes like Benefit Street) for bashing those who rely on benefits.
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