New data released yesterday by the Department for Work and Pensions (DWP) reveals that only 6% of Universal Credit claimants in the private rented sector have their rent paid directly to their landlords, compared to 35% in the socially rented sector [see page 9 of the report].
This is despite calls by Liberal Democrat DWP spokesperson Stephen Lloyd to make payments to landlords default. Lloyd has argued that maintaining the status quo will lead to many of the 1.3 million benefit claimants in the private rented sector being evicted, and potentially made homeless.
According to the Residential Landlords Association, 73% of landlords still lack confidence in renting to tenants on Universal Credit due to uncertainty that they will be able to recover rent arrears, while 38% have already experienced UC tenants going into arrears.
Stephen said:
Back in January I led a Parliamentary debate calling on the government to make direct payments to private landlords the default option for Universal Credit. Consequently I am deeply disappointed these are still far lower in the private sector than the socially rented sector.
If this doesn’t change, we should expect a spike in evictions by private landlords who are already wary of renting to people on benefits, and a rise in homelessness that local authorities will have to deal with. People on Universal Credit often live in difficult circumstances which can prevent them from paying their rent on time, as soaring rent arrears under UC testify to.
And the government cannot argue that this is technically unfeasible, because their DUP friends in Northern Ireland have already figured out how to make payments to landlords the default option. If the Universal Credit ‘computer’ allows that to happen over there, then why not here?
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15 Comments
As Chair of a Food Bank in one of the pilot areas of Universal Credit I can confirm we have known this for over a year now- and the additional problem of private landlords now complete
ely refusing to let to new benefit claimants. Our local CAB have produced a detailed analysis of the actual impact of UC which I will outline here next week on my return from holiday.
I think making Universal Credit payments directly to private landlords ‘the default’ is a terrible idea. Many private landlords won’t allow benefit claimants to rent with them. I’ve been on Universal Credit and JSA in the past and quite frankly I consider it absolutely none of my landlord’s business where my rent money comes from – as long as they get paid. It absolutely should be easier to allow Universal Credit claimants to have their rent paid directly to their landlord if they so wish (though UC doesn’t actually cover the full cost of rent for many people anyway), but the default, absolutely not! I’m disappointed that our party seems to be suggesting this.
I can understand James’s point of view that it is illiberal to pay landlords directly. Unfortunately people are being paid too little too late so some have to take out loans at extortionate interest to buy food and other necessities and there may be other difficult circumstances as Stephen says. This can lead to the loss of a home because of rent arrears. So the suggestion of paying direct to landlords would be a way of making this system work better for tenants. It also would guarantee a rental income to social housing developers which is crucial if we want to see more social housing built in the short term rather than when we eventually get into power. Hopefully, when that happens we will introduce an entirely different benefit system.
Sue Sutherland when we are in power? I’m afraid when we were in power we introduced, voted for and supported the present system.
There is a perception that all landlords are rich and can take on the burden of debt.
I am a landlord who is not and like many landlords were encouraged to invest in property.
Property prices in the low value properties that are generally rented to UC tenants still remain in negative equity.
I am pleased to rent to UC tenants however the time it takes to obtain UC and the unreliability of payments does pose risks and I would welcome direct payment to landlord which surely safe guards the tenants home and would mean I could offer longer tenancy agreement knowing my mortgage and costs were covered.
Great idea that supports both tennant and landlord.
Sorry, David, we were not in power we were in Coalition as the minor party. I disagree with a lot of what we did but we obviously managed to restrain the Tories when you look at what they’re doing now. In addition we were trying to sort out the country’s economic situation after the recession which did necessitate cutbacks. Unfortunately we were useless at telling people what we were doing and we broke a promise which showed we were just like all the other parties.
Sorry Sue, they voted for Universal Credit. End of.
They didn’t have to – they could have said ‘No’ – as one or two such as Andrew George did.
As a tenant housing solicitor specialising in defending rent possession cases, I can barely begin to describe how irrational this policy is. Landlords and tenants alike have head in hands,completely unnecessary rent arrears accrue, often prompting Court proceedings (at £325 a pop) which has to immediately be met by landlords, costs then claimed against tenants.
To answer James’s point as well (which is a point very well made and deserves careful consideration), tenants could be offered an ‘opt-in/opt-out’ system, thereby giving the tenant the option, rather than the current position which is a much reduced safeguard option which often doesn’t work and sets people up to fail.
@ Mike Norman completely agree with your second post, Mike. I do wish the party would consult people like you with real world experience when policy making takes place.
Paying the UC directly to the Landlord, whilst a good idea, is not fair to the claimant because that is ALL their benefit going to a third party who has no business knowing their financial business other than that the rent will be paid.
On the other hand, there is no guarantee the claimant will make the full rent payment to the landlord (as happens already anyway), and experience shows that the rent usually gets paid last from what is left after food, heating etc. has been taken out first. This is why rent arrears build up faster.
Not all benefit claimants can manage their money well and those of us who deal with these issues know that and see it. The assumption by government that they can is wishful thinking. Even without UC, landlords are currently owed vast sums by benefit claimants and many may never see that money ever. Some of this is because housing benefit does not always cover the rent due, so the claimant pays “topup” from their other sources. This topup is not always forthcoming and left long enough accrues to the 2-month arrears level at which point the landlord can start start eviction proceedings.
One solution that has worked is the use of Credit Union accounts, set up specifically for benefit claimants. A good example is the Rainbow Saver Credit Union account http://www.rainbowsaver.co.uk/
The UC claimant sets it up in their name but with the landlord as a beneficiary, and specifies the level of rent to be paid to the landlord. The benefit gets paid into the account, and the rent part is immediately safeguarded and paid directed to the landlord. What is left is available to the claimant to use as they see fit. If a claimant cancels the arrangement, the Landlord is immediately notified.
This is the only safe way of ensuring that the claimant is not tempted to spend the money on something else. I would prefer to see this type of arrangement promoted. I know it works.
To whoever said it above – an opt in, opt out system is pretty bloody obvious.
That its not ‘obvious’ is no surprise when you set up a working group on benefits where the majority of people are private school kids, but there you go…
On the point by Sue, in coalition we were absolutely hopeless, just as we are now. The party needs to wake up.
@ James – To which working party do you refer, James?
A solution could be that the claimant can ask for a third party deduction to be claimed from their benefit for their rent if they feel it is beneficial for them in the same way they can pay for their utility bills and fines etc. They would need to contact their benefit centre to set this up. This would also give guarantees to Landlords that their rent will be paid.
Also maybe a change in legislation is needed to stop discrimination against private landlords rejecting benefit claimants as tenants but also to abolish excessive fees but also that you can’t evict someone who is financially vulnerable.