Universal credit to scrap direct rent payments to landlords | Discuss

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Universal credit to scrap direct rent payments to landlords
05/07/2012
10:36 am
GSILVER
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Under new rules to be introduced next year, any housing benefit allowance will be paid direct to tenants, even if they are in arrears & not the landlord. This will not only subject the landlord to financial pressure and possible repossession, but also increase the likelihood of landlords refusing to take housing benefit tenants, which will increase pressure on local councils and housing associations who will also not be able to request direct payments to them. The government needs to take on board our views, that tenants who receive housing benefit directly and NOT pay their rents are not financially responsible and therefore should it should be allowed that rents can be paid direct to their respective landlord when they are in arrears as per the current rules, failure to take on this common sense approach will cause more issues for the government – this is common sense and a logical solution to all concerned, both tenant and landlords – pay rent direct to landlords
 
 
 
 
 
Please pass the links on as there is a nightmare situation developing here.
 
Cheers,
 
Gary

 

05/07/2012
11:57 am
Tenant Referencing
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Hi Gary,

Thanks alot for your posts.

 

Since the first announcement about the introduction of welfare reform via Universal Credit, in October 2010, Landlord Referencing Services has been extremely sceptical and worried about the ramifications for not only landlords and tenants but also the country’s economy; if tenants have no choice of direct rent payment to their property provider.

 

(February 2011)

Tenants Squander Money on Drink and Drugs

 

(August 2011)

Tenant Referencing Imperative if Universal Credit is Introduced

 

(June 2012)

Universal Credit Explained in Full

 

(June 2012)

 

Confirmed: Universal Credit ends direct payment of housing benefit to landlords.

 

We are now working alongside Credit Unions as we whole-heartedly believe that they will be able to offer the best solution to rent arrears and evictions, when Universal Credit goes live.

What are Credit Unions?

Half a million pounds worth of free advertising pledged to Credit Unions in the UK.

05/07/2012
3:56 pm
Keiran.F
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7 years ago, I had an accident at work that left me in a wheelchair and I was told I would never walk again.  This in turn left me on benefits and in debit and I felt I got to know the benefits system inside out.  I didn’t like it and thought I can’t do this for the rest of my life and so decided to do everything I could to get out of the situation. 

It took 4 years to get out of the chair and I can now walk with a stick and only use the chair on very bad days.  I then looked at going back to work and couldn’t due to the fact that employers looked at me as a liability.  This then gave me the motivation to go on my own and everyone said you can’t do it.  I went to the job centre and they said, no it won’t work. 

For the last two years my business has gone from strength to strength and we now manage 156 properties and the company is bringing in around £8500 per month.  I don’t think this is to bad considering the doctors told me I would never walk again and the Jobcentre said it would never work.  I know also employee 3 members of staff and could not be happier.

 

Getting back to Universal Credits

 

I have got friends that work for DWP and some of them worked in the Incapacity Benefit section.  With this section closing they moved onto the ESA processing section and they told me about regular mistakes that would happen with every claim that was transferring from IB to ESA. 

A brand new ESA claim was fine and it was just the transfer over clients that went wrong.  With this new universal credit, they are now being re trained to do this and have often said they do not know what is happening and how things will go wrong. 

For example a disabled person could receive DLA, ESA, Child Tax Credit, Child Benefit and a partner getting Carers Allowance.  If the ESA has a problem and doesn’t get paid on time then the claimant can fall back on the other benefits as a temporary measure.  With UC, if one element of the benefit fails then nothing will get paid leaving the claimant stuck.  I know the country need sorting out, but this UC is going the wrong way about it.  As a landlord, I won’t expect to get the rent paid off some of our tenants.  They know who they are and they have already been honest and say they would be to tempted with that extra money going into their account. 

It would be impossible to meet them on every payday and also very unprofessional to do that.  This is then going to put a bigger strain on social housing. 

We have landlords that will lower the rent to the LHA rate for someone on benefits as long as it’s not too much and in return they get a long term tenants with no long periods of their property being empty.  The landlords will no longer do this and will refuse to take tenants on benefits directly.  As there is not enough social housing, people will go to their local council and say we are homeless.  The local council will then rent a house from a private landlord and pay the going rate for it and the going rate is more than the LHA rates. 

What I am trying to say is, that the government will then end up paying more money out.

I could rant all day about our benefits system, but do agree the system does need sorting out. 

Something I don’t think will happen for a long time, if ever.  Anyway that’s my little rant over with.

 

Kind Regards

Keiran.

06/07/2012
10:46 am
gazman
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Hi Kieran,

 

I don't want to sound patronising but you are an inspiration and have achieved a great deal out of adversity. Most people would simply crumble after what happened to you. Keep up the good work.

 

As you go on to say......that good work will be made so much harder especially if you deal with LHA tenants.

The 'grouping' of all the benefits means if there is a query on one aspect, none will get paid. Today, if one fails at least theres another benefit to fall back on, even if it means a basic meal.

 

I really don't know how UC will work on a basic level let alone with the LHA element.

 

Your rant is justified - lets hope something positive happens from now. The pilot areas will surely see the shortcomings of this new system ?

 

Keep up the good work and best wishes,

 

Gazman Smile

07/07/2012
2:06 am
PaulBarrett
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Keiran.F said
7 years ago, I had an accident at work that left me in a wheelchair and I was told I would never walk again.  This in turn left me on benefits and in debit and I felt I got to know the benefits system inside out.  I didn’t like it and thought I can’t do this for the rest of my life and so decided to do everything I could to get out of the situation. 

It took 4 years to get out of the chair and I can now walk with a stick and only use the chair on very bad days.  I then looked at going back to work and couldn’t due to the fact that employers looked at me as a liability.  This then gave me the motivation to go on my own and everyone said you can’t do it.  I went to the job centre and they said, no it won’t work. 

For the last two years my business has gone from strength to strength and we now manage 156 properties and the company is bringing in around £8500 per month.  I don’t think this is to bad considering the doctors told me I would never walk again and the Jobcentre said it would never work.  I know also employee 3 members of staff and could not be happier.

 

Getting back to Universal Credits

 

I have got friends that work for DWP and some of them worked in the Incapacity Benefit section.  With this section closing they moved onto the ESA processing section and they told me about regular mistakes that would happen with every claim that was transferring from IB to ESA. 

A brand new ESA claim was fine and it was just the transfer over clients that went wrong.  With this new universal credit, they are now being re trained to do this and have often said they do not know what is happening and how things will go wrong. 

For example a disabled person could receive DLA, ESA, Child Tax Credit, Child Benefit and a partner getting Carers Allowance.  If the ESA has a problem and doesn’t get paid on time then the claimant can fall back on the other benefits as a temporary measure.  With UC, if one element of the benefit fails then nothing will get paid leaving the claimant stuck.  I know the country need sorting out, but this UC is going the wrong way about it.  As a landlord, I won’t expect to get the rent paid off some of our tenants.  They know who they are and they have already been honest and say they would be to tempted with that extra money going into their account. 

It would be impossible to meet them on every payday and also very unprofessional to do that.  This is then going to put a bigger strain on social housing. 

We have landlords that will lower the rent to the LHA rate for someone on benefits as long as it’s not too much and in return they get a long term tenants with no long periods of their property being empty.  The landlords will no longer do this and will refuse to take tenants on benefits directly.  As there is not enough social housing, people will go to their local council and say we are homeless.  The local council will then rent a house from a private landlord and pay the going rate for it and the going rate is more than the LHA rates. 

What I am trying to say is, that the government will then end up paying more money out.

I could rant all day about our benefits system, but do agree the system does need sorting out. 

Something I don’t think will happen for a long time, if ever.  Anyway that’s my little rant over with.

 

Kind Regards

Keiran.

 

Any fool can start a property business if they have capital and a good credit file.

The fact that you have problems moving about makes it difficult I agree, but not impossible.

I struggled for years on a wage until I was given capital and then it was simple to build up a property portfolio.

I make £3800 gross on only 4 properties.

Your gross return doesn't look that good on 156 properties.

That is not to decry what you have achieved.

Sounds to me like you have lots of LHA tenants and as you maybe aware that wil cause you severe problems shortly.

You might find it it better off returning to being on benefit.

08/07/2012
4:56 am
PaulBarrett
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I have just read on propertytribes.com that a parliamentary ans has been given advising that UC rent will be able to be paid direct to LL.

However I would never wish direct payment to be made unless I was going through the process of evicting a UC tenant.

there is the massive risk of CLAWBACK by the DWP from the LL if rent has been paid directly.

I much prefer the idea of ring-fenced rent paid from a credit union with no risk of clawback but a guarantee of being paid the UC rent or otherwise be notified by the CU that the payment instruction has been cancelled,

This gives a big clue as to what the UC tenant might be intending to do.

You can then enquire of the council what is going on if you have authority to discuss by the tenant which you should have arranged at the commencement of the tenancy.

You can then give your relevant notices accordingly.

08/07/2012
6:36 pm
LyndonBaker
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Paul B is quite right to be worried about clawback. I have never understood the passion landlords have for benefits to be paid direct when this is the risk. I appreciate that councils should reclaim the money from the benefit tenant in the first place, but how does that help you if the tenant is yours? If the council stop their payment or reduce it significantly what chances do you have of getting the tenant to make up the difference? Remember, their Sky subscriptions and i-phones have first priority over rent payments!Smile

09/07/2012
4:34 am
PaulBarrett
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What I find bizarre with the present system is that if the tenant fails to pass on the LHA to the LL then the council say that is between you and the tenant.

But if it turns out that having requested direct payment due to the tenant failing to pay 2 months rent there is an issue with the claim which might invalidate the claim the council comes to the LL!!!? for repayment of the LHA which you only had paid direct as the tenant refused to pass on the LHA to the LL!!!!!!!!?

Methinks Catch 22!!!?

So I say roll on UC I will still not accept direct payment and if a UC claimant will insist on a CU making the payments unless I have RGI on the tenant.

Which effectively means I won't be taking on a tenant as a LHA claimant at the outset.

If govt and councils realised the effects of the system which make LL liable for things not in their control why do they feign surprise that LL are increasingly refuseing to take on LHA claimants at the outset of a tenancy.

They could get rid of this clawback rule immediately and that would certainly change my take on LHA tenants.

Such a simple change!!, however the cynic in me thinks that perhaps the councils and govt know how much LHA is not passed onto LL and don't wish to suffer those losses themselves.

So are content for the LL to take the hit.

What they don't realise of course is that those wrongun tenant will have to be housed somewhere, invarably TA which costs a fortune, and certainly far more than the losses they would incur for LHA not paid to LL.

But I suppose it all comes out of different budgets etc.

These issues NEVER seem to be brought to the attention of govt and so the problems that are being expereinced with lack of PRS property available for LHA/UC claimants continue and will get worse.

09/07/2012
8:46 am
gazman
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We would take direct payments every time if offered as the ratio of re-claims against tenant debt is worth the risk.

All the Councils work differently and many simply don't ask for a reclaim, they take £10.65 per week of a tenant if they have been overpaid. This works far better as it buys you time.

Ideally it should be up to the DWP to arrange the overpayment with the tenant every time, UNLESS the landlord has acted fraudulently. It is in almost every case the tenant has been fraudulent or the Council has made a mistake.

Housing is critical and seems to be headline news every day due to the MASSIVE shortage of housing. Landlords and the DWP MUST work together to help each other to keep problems to a minimum.

Idealistic and realistic, this suggestion is, but the proof of their intentions will soon be known.

 

Gazman Smile

09/07/2012
9:38 am
PaulBarrett
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Taking such a risk is all very well if you have sufficient spare income to cover clawbacks.

Most small LL don't.

So rare though the possibility might be I would not choose to take such a risk.

An associate had £13600 clawed back from him.

He could afford it as he had lots of money.

I don't.

Why would you risk clawback anyway?

The tenant gets away with it and you have to repay for all the rent that you have been paid

Sounds a silly business proposition to me.

Ok you might have got away with it not too badly todate but the idea of maybe having to repay loads of rent you have been paid going back possibly years doesn't seem very clever to me.

09/07/2012
10:03 am
Tenant Referencing
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10/07/2012
3:35 am
PaulBarrett
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Payment of the Housing Benefit portion of UC direct to the LL is all very well bit I imagine there is still the risk of clawback.

So I still wouldn't take a UC claimant on unless paid via a CU.

I don't have to worry about tenants who go onto UC as I would still have RGI on the tenant.

Would one have to still wait fore 2 months arrears before you get UC pais directly.

If this will be the case I still wouldn't take a UC claimant on at the outset.

11/07/2012
2:47 pm
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11/07/2012
2:59 pm
gazman
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Interesting post that only reinforces the need for 'direct to landlord' LHA element of UC payments - WHEN REQUESTED BY BOTH PARTIES.

The cost to landlords and housing associations if the government does not amend this proposal will be massive due to the VAST numbers of homeless there will be.

 

The simple answer is to allow direct to landlord payments if the landlord and tenant requests it, which will NOT cost the government anything.

 

Easy answer to what could be a crippling problem.

 

Please sign the petition and pass it on - http://epetitions.direct.gov.u.....ions/35479

 

Smile

11/07/2012
3:49 pm
PaulBarrett
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gazman said
Interesting post that only reinforces the need for 'direct to landlord' LHA element of UC payments - WHEN REQUESTED BY BOTH PARTIES.

The cost to landlords and housing associations if the government does not amend this proposal will be massive due to the VAST numbers of homeless there will be.

 

The simple answer is to allow direct to landlord payments if the landlord and tenant requests it, which will NOT cost the government anything.

 

Easy answer to what could be a crippling problem.

 

Please sign the petition and pass it on - http://epetitions.direct.gov.u.....ions/35479

 

Smile

 

Your solution makes eminent sense except for the fact that direct payment no matter how facilitated results in the LL being exposed to the risk of clawback.

Until this risk is removed I for one would refuse to accept direct LHA/UC payment.

Personally I fail to see why a LL should be exposed to such clawback risks.

How can one know or be kept aware of an individual claimant's domestic circumstances which may impact on a claim and which might require repayment of benefit that should not have been paid out.

11/07/2012
9:11 pm
LyndonBaker
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As PaulB rightly states, it is the clawback element that concerns landlords. Try asking your council for information on your tenant's claim and listen while they quote "Data Protection" at you. Yet the same council expect you, as a landlord, to be accountable for a false or erroneous claim.

Councils are supposed to claim from the tenant first, but how often do they take the easy option and go for the landlord who is easier to find and "fine". Alternatively if tenant A has a clawback claim against them and you also rent to Tenant B who is also claiming, they will often deduct payments reclaimed from A, from payments they make to the landlord for Tenant B.

I say again, I do not understand why landlords want to deal with tenants on benefit. As Spock would say, "It is not logical".

12/07/2012
10:56 am
slightly concerned t
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I am ok at the mo but slightly concerned about the new universal credit and the bedroom tax.  As I have read it on this website is this true that benefits will be reduced if you are in a flat that is too large for you.  I took out a flat which is 2 bedroom but part of the stipulation is that I can only live there on my own and cannot share.  Does this mean that heaven forbid I lose my job that I would be deemed to be over occupying my flat.  Hardly my fault but am now slightly concerned that my human rights may be compromised by this.

12/07/2012
12:25 pm
jean
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Never mind the bedroom tax and universal credit!

Reading an article in the Daily Mail this morning, about how the jobless could be able to sue for better payments through a new "proposal" where the human rights law will be extended to include the right to claim benefits and enjoy a comfortable standard of living (courtesy of Labour I'd like to add) - I nearly fell of my chair!!!!!!!

Handouts aren't a god given right - us tax payers work damn hard for the lifestyles that we choose to lead and this is more political correctness gone mad.

I mean really - if its' a "human right to get paid for doing nothing" then the tax payer has a "human right" not to pay their taxes!!!!!!!!!!!

13/07/2012
12:11 am
Paul Barrett
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slightly concerned t said
I am ok at the mo but slightly concerned about the new universal credit and the bedroom tax.  As I have read it on this website is this true that benefits will be reduced if you are in a flat that is too large for you.  I took out a flat which is 2 bedroom but part of the stipulation is that I can only live there on my own and cannot share.  Does this mean that heaven forbid I lose my job that I would be deemed to be over occupying my flat.  Hardly my fault but am now slightly concerned that my human rights may be compromised by this.

 

I wouldn't worry about your human rights just start saving.

If you are under 35 you are only entitled to the LHA single room rate.

Now if your 2 bed flat can be rented at that rate or you can afford to pay additionally when you are on the single room rate then you should  be OK.

If not then yes you will have to find somewhere you can afford.

Personally whilst my AST says no lodgers, in practice I say yes you may take in a lodger providing I am given all ther details of them.

If is social housing then you will have a problem as no lodgers permitted means you would be unlikely to be able to afford it .

Perhaps you should consider your position and source a 1 bed property so that you will get the relevant LHA if your economic circumstances change.

If over 35 then at least you won't have to move.

13/07/2012
3:52 pm
Alfie Bruce
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gazman said
Hi Kieran,

 

I don't want to sound patronising but you are an inspiration and have achieved a great deal out of adversity. Most people would simply crumble after what happened to you. Keep up the good work.

 

As you go on to say......that good work will be made so much harder especially if you deal with LHA tenants.

The 'grouping' of all the benefits means if there is a query on one aspect, none will get paid. Today, if one fails at least theres another benefit to fall back on, even if it means a basic meal.

 

I really don't know how UC will work on a basic level let alone with the LHA element.

 

Your rant is justified - lets hope something positive happens from now. The pilot areas will surely see the shortcomings of this new system ?

 

Keep up the good work and best wishes,

 

Gazman Smile

Hi Gazzman I will tell you how it will work disastrously that is how.

It just is not in human nature to go without if they have money in their pockets and the last thing they need to worry about with current legislation is not paying the landlord and being throw out.

Most unscrupulous tenants know they cannot be evicted if they are not 2 months in arrears and therefore they can get a min free £1000 overdraft from their landlord without fear of any process of eviction falling on their front door mat they just run 7 weeks in arrears and keep paying the eighth every week so they never get 2 months behind Yell

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