Ministers are to press ahead with their plans to pay benefit tenants their rent money and trust them to hand it over to their landlords
This is despite the fact that a social landlord taking part in a pilot has said that, three months into the test, it is already losing money as tenants fail to pass the money on.
The pilot is running six projects to test the direct payment of Universal Credit – due to kick in next year – to tenants in social housing.
Private landlords have been calling for some time for tenants to be given the choice as to whether they receive the rental element or whether it should be paid to their landlords. Housing charities have also made the same call, saying that tenants themselves would prefer it if their landlords received the money.
In the private rented sector, landlords have had to become used to Local Housing Allowance being paid direct to their tenants. Bodies such as the Residential Landlords Association and National Landlords Association have protested that the upshot is that tenants do not pay their landlords, preferring to spend the money on something else rather than pass it on as rent.
Both the RLA and NLA claim that a number of private landlords have given up accepting benefit tenants as a direct result, or plan to do so.
Ministers have so far dug their heels in, saying that tenants must learn to handle their own finances.
Social landlords still receive rent money direct, but this is due to change next year with the Universal Credit.
Now Wakefield District Housing, which is running one of the six pilots, has said that the policy will cost it £8m a year in bad debts, and that it would have to spend £3.5m a year just on rent collection.
Kevin Dodd, chief executive of WDH, warned the reforms would mean social landlords would struggle to continue to deliver services of social benefit, such as helping people into work.
He calculated WDH’s total social benefit to the community since 2005 to be worth £1.4bn.
Dodd said: “We are into the third month of our pilot and people are now stopping to pay [their rent] at all. They’re spending the money on something else.”
But Brendan Sarsfield, chief executive of Family Mosaic, which is running the London pilot, said rent arrears stood at 5%, lower than he had expected at this stage of the pilot.
He said: “It is too early to say whether direct payments will be a success or not a success.”
.jpg)
.png)
Comments
I was thinking that I shouldn't ignore benefit claiments in my search for tenants and that they still deserved to have a roof over their heads. So now HMG has decided that claiments shoud be given the opportunity to budget properly by being paid rent directly. The landlord now has to accept the risk as to whether or not he/she receives that rent. Hmmmm, I think I'll go back to the safety position and not take on benefit claimants after all. Sorry but I don't run a charity and I want to have a less stressful life where I can control it.
Jonathan Ralston
Bluewater Properties
My opinion is that private Landlords need to unite and then be as stupid as the Government.
When it comes to paying our income tax, we just pay what we have received and then tell the inland revenue that we will pay the balance once we have got it back from the County Court or the tenant.
We could add the comment - sorry for keeping you waiting !
" Ministers have so far dug their heels in, saying that tenants must learn to handle their own finances. "
oh yes, it's that olde worlde problem of ideology vs reality.
digging heals into their own grave would be far more useful than following a goat into the slaughterhouse of stupidity.
Brendan Sarsfield's 5% comment is idiotic, it's meaningless and obviousley made by an ill-informed idiot.
So was he expecting a 100% failure to pay but found that only 95% failed to pay, is that positive then?
These people are in a dream world if they really think like and this actually improves financial awareness and responsibility, from the tenants point of view why not spend the money as there is little or no comeback if you do!
Yes Richard - "Love the comment from Brendan Sarsfield that " rent arrears stood at 5%, lower than he had expected at this stage of the pilot." - EXACTLY what I was thinking!
At what stage does he expect rents to eventually be paid directly to the landlords? Will it be when all private landlords say "NO" to benefit claimants, thus causing huge problems due to the knock-on effects of homelessness for the Government? Will it be when the tenants suss out that they don't have to pay and the infrastructure can't cope with reclaiming rent losses through the courts from anyone on benefits?? Laughable if it wasn't so serious.
The social landlords have had it easier up to now, having had rents paid directly to them. I am absolutely sick of the council absolving itself of any responsibility for non-payment of rent to the landlord, because they have paid the benefit to the claimant. It is benefit fraud when the tenant keeps claiming and not paying and I'm amazed that the council offices aren't in a position of aiding and abetting or collusion when the landlord informs them of non-payment of rent by the tenant and they keep paying the money to the tenant!
Yes Richard - "Love the comment from Brendan Sarsfield that " rent arrears stood at 5%, lower than he had expected at this stage of the pilot." - EXACTLY what I was thinking!
At what stage does he expect rents to eventually be paid directly to the landlords? Will it be when all private landlords say "NO" to benefit claimants, thus causing huge problems due to the knock-on effects of homelessness for the Government? Will it be when the tenants suss out that they don't have to pay and the infrastructure can't cope with reclaiming rent losses through the courts from anyone on benefits?? Laughable if it wasn't so serious.
The social landlords have had it easier up to now, having had rents paid directly to them. I am absolutely sick of the council absolving itself of any responsibility for non-payment of rent to the landlord, because they have paid the benefit to the claimant. It is benefit fraud when the tenant keeps claiming and not paying and I'm amazed that the council offices aren't in a position of aiding and abetting or collusion when the landlord informs them of non-payment of rent by the tenant.
`..treat them as if they are in full time work..` !
This is the phrase our local authority (Leeds) insisted we adopt when dealing with claimants.
Ok, claimants can raise exactly the same funds as somebody in work to apply for a property..err..not possible.
HMG believe that making claimants receive money direct will make them more responsible. This, generally, is not the case. Tenants will spend the landlords rent money on other things and play dumb when asked for the money.
I could cry. And probably will when this latest failed experiment is passed into law.
The introduction of Local Housing Allowance being paid direct to tenants has caused me problems in 100% of cases, I can evidence this easily. The cost to me has been thousands. This translates into losses and less tax being paid, but perhaps the tenants spending their rent on other goods is exactly what the government wants to happen, perhaps it provides a necessary boost to local economies? Although not if spent on drugs.
Why not give heroin and crack to addicts and tell them they have to learn to manage their addictions. This isn't as flippant and far-out an analogy as it might first seem.
It's a responsibility dodge for the government. That's the only logical conclusion I can come to for an obviously failed system as per the pilot so far clearly demonstrates.
Basically if the tenant doesn't pay the Benefits Office arn't interested.. I had a Tenant owe me £3000.. As far as Benefits were concerned they had paid his rent.. the fact he spent it on luxury goods which was benefit fraud wasn't in their radar... I now do not rent to benefit tenants and if one loses their job.. they are issued with notice to leave. I advice all landlords to do the same.
Love the comment from Brendan Sarsfield that " rent arrears stood at 5%, lower than he had expected at this stage of the pilot."
He doesn't say what his expectations were. So we're no wiser. Assuming he was expecting a reduction, it doesn't bode well for direct payments.
Who'd have thought !