Member News
29th November 2012The National Landlords Association has concerns about changes to benefits.
“We understand that the benefits bill is exploding, particularly housing benefit and that needs to be brought under control,” says NLA chief executive Richard Lambert.
“We support the principle that work should pay more than living on benefits.”
Mr Lambert’s members are worried about the impact of some of the changes on both landlords and vulnerable tenants alike.
“The concern is that the practicalities of some of these things have not been thought through,” he explains.
“The practical consequence is that is creating as many problems as it solved.”
Universal credit, which will be introduced in October 2013 for new claimants and from April 2014 for existing claimants, combines all benefit entitlement into one monthly payment.
This new system will cap the benefit amount paid to each household at £26,000 per year. It is expected that the transition period will take until 2017 to ensure universal use of the new system.
Mr Lambert is worried about the impact of that change on landlords. Since April 2011 the rates are set so 30% of rental properties in the area are less expensive and 70% more. Housing benefit can only be claimed for properties in the lower 30%.
“That puts quite a lot of properties out of people’s reach and some have to provide a rent top up themselves,” says Mr Lambert.
“There is already concern that, that threatens arrears.
“There is a move towards paying the benefit to the tenant directly.
“Currently the tenant can opt for the rent to be paid to the landlord or if the tenant builds up arrears the landlord can then ask for the benefit to be paid directly to them to stop the arrears getting worse.
“What we have seen under universal credit means there will be no single housing component.
“The tenant will be expected to manage their budget. Some of the people who are claiming are vulnerable people who live chaotic, disorganised lives and they may well find that quite difficult.
“The landlords are concerned that those people won’t pay the rent or the top up, arrears will develop and the landlords cannot automatically trigger a system that starts to pay rent to them directly.
“The landlords will have to bear the financial burden of people who don’t pay the rent.”
Mr Lambert says these issues have been raised with DWP, but he is concerned that “when we start giving them difficult examples they fall back on the principles of what they are trying to do”.
“They listen and they say they understand the issues, but let me put it this way, I think the DWP seem to be very optimistic that they can make this work. Sometimes I wonder where that sense of optimism comes from.”
He gives an example. If someone on housing benefit cannot pay their rent, they will be evicted.
“If you have a tenant on benefits who loses a tenancy they cannot go into social housing. It is unlikely another private landlord would take them on, so where else will they go?
“The answer we got back is that a local authority has a duty to house homeless people, but they are not statutorily homeless so they are not covered by that.
“They (DWP) had not understood the practicality. There is a genuine worry we would create a situation where these people would be left vulnerable.”
Mr Lambert said some landlords are running out tenancies with people on housing benefit and replacing them with working tenants because they are so worried about arrears building up.
Another effect of the cap is that many areas of the capital are becoming too expensive for people on housing benefit.
“In some parts of London if the cost of housing in an area is greater than the benefit can support then people are faced with going into arrears and potentially losing their home that way, or looking elsewhere to try to find somewhere within their resources,” says Mr Lambert.
“That may well mean see that people will be moving away from areas of high cost, there is talk of London councils looking at places like Hastings on the South Coast, as well as Stoke and Hull.
“People will have to move away from where they are established, where their roots are, to find areas where they can afford to live.
“That is going to have an impact on resources such as schools and hospitals and indeed on public services at a time when they are under pressure.”
Mr Lambert says surveys of NLA members show that many are prepared to negotiate on the rent to sustain a tenant.
Another area of concern is the redesign of government online services, including the DWP’s website and affecting the administration of welfare payments, which aims to save £1.2bn over the next three years.
The government believe that digital by default will see accelerated savings, as government-related transactions go online.
Mr Lambert says this is once again a practicality issue.
“The latest ONS survey on penetration of access to the internet and the ease of getting online showed that people on the lowest income bracket are also the ones least likely to spend time online or have access to a computer.
“While in principle digital by default is the right thing to do, how do you actually get the people in these communities to a point where they can access the internet?
“It is one thing to say that in an urban area, but there was one example I was given of someone living in a rural community where broadband has not penetrated. How do you get to them or get them to the nearest source?
What if they are in a wheelchair, if there is only one bus in either direction every day?
“It is coming back to working through those practicalities and thinking about where are the difficult exceptions.”