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Rent arrears ‘are lower under direct payments to landlords’

With new research showing that direct payment of benefits to landlords contributed most to reductions in rent arrears, the Residential Landlords Association (RLA) is calling for greater support for its position that tenants in receipt of Universal Credit should have the right to choose whether the housing element is paid directly to their landlord.

Private landlords renting to Universal Credit claimants can apply to have the housing element paid directly to themselves when a tenant has reached two months of rent arrears. This is known as an Alternative Payment Arrangement (APA).

Southwark Council was one of the first areas of the country to see Universal Credit full service roll out. Its rolling reports on the impact of this on housing have found that there is a noticeable decrease in the levels of arrears for those claiming Universal Credit in 2018 compared with those transitioning to Universal Credit in 2016. 

The Smith Institute report commissioned by Southwark Council states that “it is the earlier and increased use of APAs, rather than other reforms, which have contributed most to reductions in arrears levels observed”.

On average, each person in the 2016 group was six weeks in arrears at the end of the period compared with just under two weeks for the 2018 group.

The report adds: “Originally designed to apply to a handful of cases, more than 40% of Southwark tenants claiming Universal Credit have now entered into APAs with the council to help manage their finances”.

Landlords may apply for an Alternative Payment Arrangement but only after two months of rent arrears have built up.

More than half the people claiming Universal Credit are in rent arrears, according to the Residential Landlords Association (RLA).

It reports that 54% of those private landlords who have let to tenants on Universal Credit in the past 12 months have seen them fall into rent arrears. Of these, 82% said that the arrears only began after a new claim for Universal Credit or after a tenant had been moved to it from housing benefit.

Some 68% of landlords said that there was a shortfall between the cost of rent and the amount paid in Universal Credit.

David Smith, policy director for the RLA, said: “Our own research finds that over half of landlords with tenants on Universal Credit have seen them fall into rent arrears in the last year.

“The report demonstrates that arrears are lower under direct payments to landlords and supports our call for the government to give all tenants on Universal Credit the ability to choose to have the housing element paid directly to their landlord.

“Many tenants feel more comfortable with managing their finances knowing that their rent is paid and it should be up to them to be free to make that decision.”

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    Gosh! Who would have thought that some benefit claimers couldn't be trusted to manage their money properly?
    However it's still no DSS for me no matter what other "incentives or good news" accompanies them. Enough hard working tenants around to keep me happy thanks to the growing shortage rental properties.

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    I would be delighted to see Tenants managing their money. The problem is its not their money when on Benefits it ours so go get your own money & manage it all you want. The Councils are now aiding potential Tenants to withhold information from LL’s, there is a box on the form if you don’t want your LL to know your on Benefits thick this box.

    Paul Barrett

    I always thought that an AST was required to generate a HB claim.
    If the resultant HB isn't paid to the LL isn't that criminal deception!?

     
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    The gov give them Housing Benefit inc in Uni Benefit. The tenants spend the benefit that was given to them on going out, partying, expensive cars mini breaks nails done, endless toys for their kids.
    Why isnt this straight theft? Its an amount if stolen elsewhere would land you in prison

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    I've been a landlord for over 30 years and would not dream of letting to anyone on benefits.
    However, with all the anti-landlord changes that have been introduced recently and the most likely end to Section 21, I have decided to sell up my rental properties. It is now impossible to plan properly with all of the changes coming through constantly, and God help landlords if Labour ever get into power.
    I'll spend the money on a larger home (which I don't need) for myself.

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    That is the perfect answer actually. I intend to do the same. Sell up buy a stupid oversized property and travel more. The real losers in all of this are the tenants that are not in a position to purchase. They will have an awful shock when we are forced to sell.

  • John Cart

    Our stance is quite simple regarding benefit tenants, we refuse to deal with the hopeless, dysfunctional DWP and LA that fund them, end of story.

  • Paul Barrett

    It seems many other LL are following my thinking.
    Sell up and buy big residential house possibly taking on a lodger or two.
    Stuff the tenants.
    The PTB clearly don't want Private LL housing these tenants so we will have to oblige them.
    I believe residential property with lodgers is the new BTL.

    Obviously not so easy to do due to lender criteria.
    But has to be better than multiple BTL properties with all the risks attendant on them.
    I'm selling all my flats making 14 tenants homeless.
    I will try for the big resi property and take in some lodgers.
    I should make more income than with the BTL properties accepting that I would lose multiple CG.
    CG ISN'T guaranteed and what with the risks if a Labour Govt the AST market is kaput.
    So like others I'm getting out!

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