Rents will be paid direct to housing benefit tenants in private rental accommodation, rather than to landlords, once Universal Credit comes in – despite fears voiced in Parliament that tenants will run up large arrears.
The concerns were raised by a Labour MP, Alex Cunningham, who represents Stockton North, but benefits minister Iain Duncan-Smith said that tenants on benefits could no longer be treated like children.
The Residential Landlords Association, together with organisations such as Shelter, has consistently lobbied for choice with Local Housing Allowance – the benefit currently paid to claimants in private rental accommodation.
Both organisations say that tenants should have the choice as to whether the benefit is paid to them, or their landlords, and that this choice should extend to the new Universal Credit. So far, the lobbying has proved unsuccessful.
This month’s Parliamentary exchange went as follows:
Alex Cunningham MP: As other hon. Members have mentioned, the introduction of universal credit will mean that housing benefit will be paid not directly to landlords but to tenants, and that it will be paid monthly rather than fortnightly, causing tenants to go into substantial arrears.
Does the Secretary of State agree that, when assessing whether a claimant is vulnerable enough to be exempted from monthly payments and receiving their housing element directly, it should be standard practice to consider the feedback of third parties such as social services and voluntary sector services as well as claimants?
Iain Duncan-Smith MP: I do, yes. We want to pay people directly, and we already pay local housing allowance to such tenants directly, which the hon. Gentleman and all hon. Members should remember. The vast majority cope with that payment – they are very similar.
The point is this: we do not intend to cause problems, but the more we continue to treat people in receipt of benefits like children, the less likely they will be able to cope when they go to work.
Those who can, absolutely must get on to that payment schedule, but we will obviously talk to all the bodies to which he referred to ensure that we identify those who cannot. If people cannot get on to that schedule, we want to surround them with help and support to find out why they cannot manage their payments, and to rectify that rather than just throw money at them.
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Comments
It's about time now we can see the scum who don't like to pay bills will be kicked out of there homes this is the best Goverment we have ever had in power cameron should be a sir and ian duncan smith should have an obe
the lunatics have taken over....the rent should be paid directly to the landlord
just how difficult is that?...paid to the tenant it gives the temptation to pay something else or buy something else
this rented sector is more and more unfit for purpose
Hello Ray
The email address was at the bottom of the first post; robert@addjuvare.com
If the system is standardised on "monthly" all of the stakeholders in the Private rented sector know what is going on and are used to explaining it to tenants and landlords.
One of the big problems that face landlords even if an assisted tenancy runs smoothly and on time; 13 payments in 12 months and 12 top ups if they have a mortgage they will be required to make 12 payments. I know very well that if one is a landlord finances should not be so tight but when the first 4 weeks rent isn’t paid till week 6 the landlord has had to fund 1 month payment, potentially/ effectively putting them in a mortgage arrears situation. It is only after 12 months when 2 payments are received within the calendar month that the account is back on track.
I want to remove all notion of their being a risk with assisted tenancies so that families can be given a home irrespective of their employment status which sometime changes un-expectedly for the worse and occasionally for the better.
@Robert May on 2012-09-13 14:46:54
Couln't see an email address.
However no matter, I understand and agree your points.
One of the problem seems to be that in many areas rent is calculated by the week and in others by the month.
Also M.P's and many civil servant still have a mind set that 'workers' are still paid by the week in a brown envelope!
Would not a solution be that a choice could be offered to make the HB payments either 4 weekly or monthly? This would not however deal with what my experience tells me regarding HB tenants not regularly passing on the payments (sometimes not at all and if they play the system, it takes six months to get them out, still not paying!)
In conclusion of this particular thread I still feel that private landlords accepting BH tenants is not worth the risk, especially in the current Bull market for lettings, unless they are paid direct with no unfair clawbacks.
Regards,
Ray
Hello Ray,
I would value being able to talk to you, my email address is below if you would like to find out how it will work for Agents , Landlords and tenants.
My 26 years experience falls short of your 35 but I am quite happy for you offer advice, comment or criticism but would like you to understand what it is I am proposing.
I think it is unfair to suggest that it is only Social tenants who struggle with arrears. My experience says that it is the 13 x 4 week part payments of HB with monthly top ups from the tenants that cause the chaos.
A simple tenancy of £400 per month, £4800/annum, housing benefit contributing 86% becomes a nightmare under the current system, then if there is 6 week delay starting to pay the rent, chaos and confusion reigns.
Ready?
Week 1 - Rent calc tenant owes £400
1 month later (week 4.3333333) rent calc tenant owes £800
Week 6 Rent paid by HB (£317.54) tenant owes £482.46
2.33 weeks later rent calc tenant owes £882.46
Week 8 rent paid by HB (£317.54) tenant owes £564.92
Week 8.6666666 rent calc tenant owes £964.42
At this point someone tries to explain to the tenant they should have been paying a top up to the agent once a month. Even if the tenant pays over what “they” owe £112 up to that point try explaining to a landlord what is going on and why it will all sort itself out after 19 - 4 week periods.
If a tenant is given their rent and asked to pay it along with their top up once a month it is a very easy job to monitor. Iain Duncan-Smith needs to get rid of 4 weekly payments and provide rent at the beginning of the tenancy then a lot of the chaos and and phobias about assisted tenancies would disappear.
Week 1 rent calc Tenant owes £400
Tenant pays rent, tenant owes £0
1 Month later Rent due--- rent paid tenant owes £0
If the tenant fails to pay the rent – section 8 or 21
Hopefully my system is a bit easier on Agent too!
Best regards
Robert
Excellent! - Just what is excellent for agents and landlords?
After over 35 years in the business (but thank the Lord I am no longer directly involved) I know that giving the rent to a tenant to be passed on to the agent or landord is a recipe for chaos and increasing arrears.
Of course most tenants are not stupid. Human nature can take over in difficult times and they know delaying/witholding payment is easy and will end with not much more than a slapped wrist. If financial help is provided for housing by the State it should go to the supplier direct, after all who would know and what has the tenant got to lose?.
Excellent! this is the first step in bridging the gap that exists between social and private rented tenants. There is nothing more demeaning as being a child identified as being on free school dinners, same applies to renting property. Circumstance does not make people stupid and good fortune doesn’t make them smart.
If the education process for some people has to go beyond age 16 then our society has an obligation to everyone, if that education needs to include subjects outside national curriculum so be it. Financial management is something that it appears to have gone out of the window with widespread access to unsecured credit.
I have been looking at a solution to this problem for best part of 5 years, I have a solution which has been cross examined repeatedly and not a single hole has been found in the proposal. It is a product that does not cost Agents or Landlords a penny but more important than costs and money it enables ALL tenants to be treated with dignity and on a level playing field. It shouldn’t matter to a landlord or Agent if a tenant is fully, part or not assisted with their rent. If the rent is paid on time (not arrears) and in one part (not two) I defy any agent to spot the difference between an assisted and an un-assisted tenant.
The biggest hurdles to assisted tenants in private rented property are; the deposit, the delay receiving the first rent, payment in arrears thereafter but worse than all of those is the 13 part payment and top up system that simply cripples an agent’s client account procedures. I have a solution that with assistance from Mr Duncan-Smith (literally, put your money where your mouth is Ian) solves each and every aspect of the problem.
I would like the opportunity of running through my proposal with the likes of Ray Comer, Industry Observer and anyone else who has a sensible and committed desire to improve our industry. Anyone who wants to have a dialogue about my idea can contact me robert@addjuvare.com.
Sadly, great as it is LAT has too many stalkers and trolls to enjoy an open and unspoilt discussion so I won’t be discussing in detail on here.
@ Industry Observer
I may have misunderstood your point however if people can't live on the national average wage then they should cut their cloth until they can. Many in the country have to make do with what they earn and live to their means, it is time all are treated the same.
Quite simply sucessive Governments of all political leanings have completely misread the housing requirements while at the same time making people dependant on benefits.
They can do all they like but if demand outstrips supply the prices will increase - basic economics, therefore a social housing program is the logical way forward to get a long term solution. This needs to be paid for and could be in part by selling state properties in exclusive areas that the average person in the street could never consider attaining.
If the population of the country continues to increase at the rate it is we will still and always be short of housing due to a simple lack of space.
@IHS
Don't make the mistake that they cannot manage their affairs. Of course some cannot - just as some bankers cannot do their job properly or apparently manage without inflated salaries and bonuses.
I sw a statistic a few months ago from a very reputable source, though I forget which one, and it shocked me.
Did you know 90% of claimants actually work? Their problem is that their incomes are too low, and generally fixed, whereas the price of everything they pay for, rent included, is not.
Having said that I fail to see the story here. LHA has always been paid direct unless the tenant is deemed vulnerable (previous history) or has 8 weeks arrears (current problems).
If posters want to focus on the real issue here it is that apparently rental allowances will be the last element in the calculation of total entitlement to Universal Credit, so when the initial proposed maximum is reached (is it £26K?) that is it.
So if a claimant is already entitled to say £20K that just leaves £6K for the rental element. Not much help if the rent is over £500 a month.
Anyone know anyy different - is that still how it will work? If so that is the problem to worry about - not where the money will be paid 'twas ever thus under LHA. But how much they get paid.
I would suggest until this is all clarified and entitlements are known post April 2013 that no LHA tenent ius given a new fixewd term, during which they may have a significant shortfall, but are left to go periodic.
Just a thought
The reason a lot of people are on benefits is because they have difficulty in managing their lives so paying them their rent direct is putting temptation in their way. Surely it is better to ensure they retain a roof over their heads by paying their rent for them rather than giving them money which may or may not reach their landlord particularly at certain times of year such as Xmas.
When we did accept benefit claimants most were more than happy to agree to their rent being paid direct. In fact it was those who did not receive full benefit where we often had difficulty in obtaining payment of the shortfall.
The Government does not seem to grasp the fact that a large proportion of the housing market is now no longer available to benefit claimants particularly with strong demand from those in full employment.
More landlords no longer want to accept housing benefit tenants due to the rent being paid direct to the tenant. This has caused a very difficult market for HB tenants. Surely the councils have seen this? We turn away almost all HB tenants due to no landlords wanting them. Where are they all going to live?