Direct payment of housing benefits to landlords rather than tenants will be allowed – but only in Northern Ireland.
Landlords are now urgently calling for the move by the Department for Work and Pensions to be copied in the rest of the UK.
Following discussions with the UK minister Lord Freud, Northern Ireland’s social security minister Nelson McCausland confirmed the policy in a statement to members of the Assembly.
He said: “This is an important change as it will help to avoid rent arrears, with all the implications that can have for claimants and their families.”
Currently Local Housing Allowance is paid direct to tenants, and it is proposed that the new Universal Credit will also go direct to tenants.
However, private landlords say they risk having the rent not passed on to them, while a number of studies have shown that tenants themselves would prefer the rent money to be paid to their landlords.
Ministers at the DWP have argued that payments to tenants will promote financial responsibility.
Chris Town, vice-chairman of the Residential Landlords Association, said that the Northern Ireland move should be copied elsewhere.
He said: “With 9.1% of all rent in the private rental sector being in arrears, this is a situation which is simply not sustainable for either tenant or landlord.
“Both parties in the Coalition before the general election pledged to introduce direct payments to landlords. Organisations working with tenants including Shelter, Citizens Advice and the Money Advice Trust all support tenants having the choice to have their rent paid directly to landlords.
“The Government should get out of the way and trust tenants to know what is best for them.
“If it’s good enough for Northern Ireland it should be good enough for the rest of the country.”
*Tenancy deposit protection is to be introduced into Northern Ireland, along with licensing for private landlords.
The Northern Ireland Assembly has approved draft new rules which will allow local councils to establish registers of private landlords operating in their areas, while a tenancy deposit scheme similar to those in England, Wales and Scotland will be set up.
Jennifer Donald, head of policy and public affairs at the Chartered Institute of Housing Northern Ireland, said: “The private rented sector has grown really rapidly here. It is now bigger than the social rented sector by 2% to 3%.
“These regulations are important, primarily to help us get a better sense of the private rented sector.”
Comments
Thank you for the reply David.
The thing about a Direct Debit is that it takes a positive intention from the tenant to cancel it. That tends to leave the Tenant with some explaining to do. Presently the Mobile Phone/ services DDs takes precedence over the SO or cheque to pay the rent. Given a choice of which DD they have to cancel through lack of funds which one do you think will get cancelled?
Sorry, but DD is not ideal at all.
Google how to stop one and you find the following, among many:-
"How to cancel a Direct Debit
You can cancel a Direct Debit at any time and the process is very straightforward.
Simply contact your bank or building society, if this is by phone or internet, written confirmation may be required (use the link below to download a standard letter template in Word format for this purpose). We also recommend you notify the organisation concerned, you could do this by sending them a copy of the letter you send to your bank."
Your bank or building society can generally make the cancellation up to and including the due date, but try not to leave it until the last minute or you run the risk of a payment being made.
I am of the old school too Ray, if a student fails to learn then it is an indication that the teacher has got the means, motivation and reinforcement wrong.
I fully appreciate that all of us take time to learn how to budget, it isn't something taught in schools and once that opportunity is lost there is no opportunity or obligation to grasp one of the more important life skills.
I see the only problem with LHA being the lack of instruction that came with it. I am suggesting that LHA passed to Tenants and then TAKEN by direct debit fulfils the benefits of LHA but removes the temptation of an account full of cash.
Mobile phone companies and service providers like to have customers on DD for the very same reason Agents and Landlords should, they want to get paid. Standing Orders are controlled by the Tenant, Direct Debit is not. Elevating Rent to the same collection status as the other monies collected from Tenants means that Tenants will be forced to assess which of their commitments they have to pay first. A roof over their head or a 72” 3D LCD with cinema Sound?
LHA was based on giving tenants dignity and a sense of financial responsibility - look where that ended up.
I'm sorry Robert but I'm of the old school that believes respect needs to be earned or at the very least a two way street.
@Ray Comer on 2012-10-25 11:00:26
Spot on!
I would NEVER recommend a DSS tenant to a landlord unless the rent was paid direct to the landlord or the agent (knowing the attitude of some landlords better the agent, they can then be sure of their management commission). Have these people not heard of human nature?
The answer is to make Rent a priority debt along side Direct Debits for Mobile phone contracts etc. Collecting rent by DD means that the tenant has to cancel the DD in order not to pay their rent.
If a tenant deliberately cancels their DD then the benefits people can be informed immediately what is going on.
Collecting Rent by DD gives dignity to tenants and the good are not stereotyped along side the bad. As an industry we ought to be sympathetic in our understanding of someone wrongly labelled because of the wrong doings of a few.
I have been looking at assisted rent tenancies for quite a while and have an intelligent solution that works for Landlords, Agents and Tenants. There is a cost to the landlord but they get their rent on time whether or not the tenant has paid and based on the figures in this article the saving to the landlord is approaching 6% on an average tenancy.
Forward thinking agents will be aware that with about 3.8 million social tenancies as a prospective market compared with the 3.62million properties in private provision, finding a system that works for all stakeholders and which gives respect and dignity to tenants of all circumstances effectively doubles the size of market they can earn from.
"Beside all that, does receiving benefits mean everyone is less trustworthy or less able to manage money than someone with a job? "
In a lot of cases, yes it does mean exactly that. When I took benefit tenants I was fighting a daily battle to get their rent out of some of them.
With less money to go around, they would always plump for the easy option of holding their rent back whenever they had a 'crisis'; like needing a new flat screen TV, a holiday, new trainers for the kids, christmas etc. In fact whenever they needed something the first thing to get cancelled was the rent.
Kids need to learn about Maslow's Hierarchy in school, that might help save future generations from the same mistakes.
this is Letting Agent today isn't it? how come this story is being posted on here rather than Landlord today? Rent being paid to Agents makes sense but direct to the landlord?
Ball park Agency arrears at just under 4% and compare it with Landlords direct at over 9% and it seem very obvious why Landlords ought to be using an Agent.
Beside all that does receiving benefits mean everyone is less trustworthy or less able to manage money than someone with a job?