Landlords' right to receive rent scrapped under new benefits

Friday 29th June 2012

Details of the Government’s new procedures for the payment of universal credit have been released and they confirm that a private landlord’s right to insist on direct rent payments if a tenant is in arrears will be scrapped.

The Residential Landlords Association, which represents around 15,000 private landlords, reacted with anger.

It said that when the new benefit system is introduced, payments will be made directly to tenants ‘and it will be up to them to pay their rents or not’.

Currently, Local Housing Allowance is paid directly to tenants who live in private rental accommodation. However, landlords can ask for it to be paid to them if the tenant falls into arrears or is declared vulnerable.

With universal credit – due to come into force next year and include benefits such as housing allowance – the new procedures will apply across the board to local authority tenants, housing association tenants and tenants in the private rented sector.

The RLA has raised a number of serious concerns about the proposals, saying that there is no right of redress for landlord if things go wrong, and that the whole concept creates risk for landlords. It has also attacked the proposals for lack of clarity, saying they have replaced ‘regulations’ with ‘guidance’.

It says that landlords will become increasingly unwilling to accept tenants on benefits.

Richard Jones, the RLA’s policy director, said: “We strongly believe that the Government’s whole approach is flawed, and although the objective of helping tenants to manage their financial affairs is in isolation a laudable one, the Government has wholly failed to appreciate the consequences of this.

“There will be a much higher level of arrears, an unwillingness of landlords to house benefit claimants (at a time when there is huge pressure on social housing), increased unwillingness by banks to lend for this kind of property (or increased interest rate to reflect the risk), much higher levels of evictions and much greater homelessness.”