Accepting Housing Benefit tenants into the Private Rental Sector has always been fraught with issues, more often than not, down to the Local Council payment procedures and the difficulty of getting anything sorted when an issue occurs. On top of that, there is a big black cloud over the entire Housing Benefit system, called the “clawback” which means, despite doing nothing wrong, that landlords can find themselves with a demand to repay Housing benefit rent money, because the ‘system’ has found something to investigate, which can, quite often, be a misdemeanor, but the Council have the power to stop payments and clawback money ‘whilst investigating’.
This is why so many agencies and private landlords advertise their rental homes with “no DSS” clauses. It’s a horrid catch-22 system, as most landlords or agents would be happy to assess all tenants on their merits as applicants who will look after the property and pay the rent on time, regardless of the source of the rent.
All that said, for those agencies and landlords who do accept Housing Benefit as a means of rent payment, Works & Payments Secretary Amber Rudd’s reforms for Universal Credit housing payments to come direct to landlords appears to be very welcome. On 11th January Ms Rudd confirmed that this Summer the Department will launch an online portal for private landlords to obtain their rental money directly from the LHA, cutting out the tenant. This takes the process back about 10 years, when it was the norm to receive rent payments direct from the LHA, albeit with less clarity than, perhaps, an online system will provide (fingers crossed). At the moment, landlords can apply for a direct payment “Alternative Payment Arrangement” (APA) but only once the tenant is in 8 weeks arrears, and then it is likely to take around 9-10 weeks for this to be processed, meaning almost 4 months with no rent.
Research leading up to this announcement found that almost two-thirds of private landlords with tenants receiving Universal Credit had experienced their tenants going into rent arrears. Based on responses from over 2,200 landlords, the Residential Landlord Association’s (RLA) research exchange, PEARL, found that 61% of landlords with tenants on Universal Credit have experienced them going into rent arrears and this was an increase from only 27% in 2016. The study found that on average Universal Credit tenants in rent arrears owed almost £2,400, which is up almost half – 49% – compared to last year. In Great Britain one in every forty nine people claim Universal Credit, that was 1,317,985 people in October 2018, so this new system could have a very positive impact. It is hoped that these measures will help to strengthen choices and opportunities for families on Universal Credit to secure homes that they really need.
It is also hoped that the benefits freeze will be lifted by 2020, so hand in hand with the new online UC system, maybe more landlords or, indeed, letting agents, can start to offer homes to a wider proportion of the tenant stock and try to incorporate slightly more Housing Benefit tenancies into their portfolios.
You can check out Amber Rudd’s new approach to Universal Credit here: