Is it time to rethink the experiment of paying housing benefit direct to tenants?

Andy Winter /   June 29, 2015 at 8:38 PM 1,170 views

One feature of welfare reform is to try to mimic employment conditions, with those claiming housing benefit being responsible for the payment of their rent. In itself not a bad objective. But when it is proving to be counter-productive to landlords and tenants alike, one has to question whether it is a case of the operation being a success but the patient died. In the past, rents could be paid directly to landlords. This was changed for tenants in the private rented sector who now receive their rents direct and are expected to pass them on to their landlords. Arrears went up and an increasing number of private landlords will not consider letting to tenants claiming housing benefit (although there is little to suggest that people earning are more willing to part with their hard-earned cash than those in receipt of benefits). Under universal credit, with the exception of certain forms of housing (such as supported housing), payments are going to tenants with the expectation that they are passed on to landlords. In today’s Inside Housing magazine, it is reported that “one in four tenants on the universal credit direct payment demonstration projects have had their benefit switched back to their social landlords due to rent arrears”. Based on figures released by the Department for Work and Pensions from its six projects to test the reality of direct payment to tenants, 1,647 of the 6,366 tenants to take part have had their payments switched back to the landlords. Just 107 tenants who had their benefit switched to the landlord have had their direct payment restored to them after repaying their rent. Being able to switch payments to landlords is appreciated, but it only happens when tenants are in trouble. Prevention is, as they say, better than cure. At the same time, Inside Housing is also reporting that “the number of eviction warning notices issued to social tenants because of rent arrears has soared by more than a quarter in a year”. In a survey of 113 social landlords (councils, arm’s-length management organisations and housing associations), it was found that they are increasingly using the threat of eviction to protect their income in the face of welfare reform and the squeeze on living standards. According to Inside Housing the survey showed that these landlords issued 99,904 notices seeking possession for rent arrears in April to November this year, compared with 79,238 for the same period in 2012 – a 26% increase. At this very difficult time, private and social landlords need as much support as possible to sustain confidence of lenders and their own financial viability. The switch of payments from landlords to tenants is an unnecessary and counter-productive measure. Courtesy of Andy Winter at Andy Winter’s BHT Blog

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