Universal Credit Confusion Increases
According to latest research from the British Property Federation increasing confusion over how rent arrears will be tackled under Universal Credit has prompted 39% of landlords with more than 10 properties to reduce the number of lets available to benefit claimants.
Universal Credit is designed to offer greater protection to landlord from rent arrears, however the BPF’s latest findings show that this message has not been accepted by almost four in 10 larger landlords across the country.
Therefore they have called for :
- Greater dialogue between landlords, tenants, NGOs and government – at a local and national level – to clearly explain the implications of Universal Credit.
- For the Department for Work and Pensions to set out how they will inform private landlords when a tenant has a change of circumstances that affects their housing benefit.
- For the Government to do all it can to ensure tenants do not fall into arrears, including allowing them to choose direct payment from the outset if they are worried about managing their finances, as recommended by the DWP Select Committee.
Ian Fletcher, director of real estate policy at the BPF, said:
“We urge DWP to implement alongside Universal Credit, a system to inform private landlords when a tenant has a change of circumstances that affects their housing benefit. This basic step will provide reassurance to a landlord and reduce any confusion regarding delayed payments or applications for alternative payment arrangements.
“The challenges of housing supply are long term issues that will inevitably see the private rented sector continue to be relied upon to house welfare recipients. Universal credit is the most radical change to affect the payment of benefit in several generations and if private landlords do not feel confident they are going to receive rental income they will vote with their feet and not engage with it.”
As a private landlord, letting agent and/or tenant it is extremely important to understand that Housing Benefit is currently paid to the landlord but this option will be abolished under Universal Credit; primarily because ministers believe it will help tenants manage their finances better.
The DWP have stated that there will be a mechanism within UC to facilitate the payment of benefit direct to the landlord once someone is identified as vulnerable, but have not yet announced what type of tenants will fall into this ‘vulnerable’ category.
At LandlordReferencing.co.uk we believe that the Government’s “flagship” welfare reform via Universal Credit will only make thousands more tenants homeless in the UK, as well as heaping even more debt onto the country and the taxpayer (especially if the option of Housing Benefit being paid directly to the landlord is abolished) e.g. Failed UC Pilots.
Reasons why direct payment of housing costs are an extremely important option for both landlords and tenants :
- Direct payments help reduce the personal debt of landlords and tenants.
- Direct payments help to reduce the risk of a tenant losing their home.
- Direct payments help to reduce the risk of landlords losing their investments.
- More than 15% of local authority tenants and 13% of housing association tenants do not have a bank account; therefore would be unable to pay their rent by direct debit if this option was abolished.
- The financial security that comes from direct payments has been critical for social landlords in securing private investment at highly competitive rates – which has maximised their capacity to deliver much needed affordable housing at good value to the taxpayer.
- A research report by Policis in 2012 [ Optimising welfare reform outcomes for social tenants ] found that 86% of social tenants believe “strongly” that it is better for their Housing Benefit to be paid direct to the landlord so that they are secure in their home.
- With 9 out of 10 tenants opting for rent to be paid direct to their landlord 92% stated that they would choose this option again, if given the choice.
Landlords, Letting Agents and Tenants please share your views and experiences with regards to welfare reform via Universal Credit by CLICKING HERE.