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Bill Irvine: RLA encourages landlords to back those on housing benefit

RLA
Written by RLA

RLA consultant Bill Irvine reassures landlords that there is no need to follow the lead of Fergus Wilson by serving Section 21 notices on tenants reliant on Local Housing Allowance, as there is still high demand, margins are often good, and the “threat” posed by Universal Credit is being overstated and sensationalised, mainly through lack of knowledge of the new scheme!…

RLA consultant Bill Irvine reassures landlords that there is no need to follow the lead of Fergus Wilson by serving Section 21 notices on tenants reliant on Local Housing Allowance, as there is still high demand, margins are often good, and the ‘threat’ posed by Universal Credit is being overstated and sensationalised, mainly through lack of knowledge of the new scheme…

Fergus Wilson attracted the spotlight, after his controversial comments in the press last week, when he said that he has sent notices to his 200 tenants on housing benefit, preferring to offer tenancies to European nationals.  At the time he defended his decision saying that terminating the tenancies, even where many tenants had accrued no rent arrears, was ‘business driven’ and that if he is heartless “all landlords are”.

Whilst Mr Wilson is entitled to make such a decision, the RLA takes issue with the latter statement as we know this is untrue. We dedicate time and resources to demonstrate to Government, and other stakeholders, how the majority of landlords in the private rented sector are responsible, diligent and well aware of their obligations to tenants.

In the past few weeks the media spotlight has fixed itself very much on Universal Credit, the bedroom tax and the payment and costs of benefits in general.  Whether this is embodied in the Government’s welfare reform agenda, on Channel 4’s ‘Benefits Street’, or the subject of Fergus Wilson’s provocative claims; benefit claimants are very much under the microscope.  Universal Credit and, in particular, the effect this could have on the private rented sector is a serious issue. However it is one that deserves a debate, based on fact, and not the hyperbolic stereotypes we have been subjected to in the media.

We are encouraged by the fact the majority of landlords, whilst taking a keen interest in developments, are standing alongside Local Housing Allowance (LHA) tenants and continue to lease properties to this disadvantaged group of tenants. It must be evident to the Government that LHA landlords are playing a key role in providing accommodation to ex-social tenants, displaced by changes like the bedroom tax and benefits cap.  Chronic waiting lists and housing shortages all over the country mean that private rented accommodation is now more in demand than ever as a housing “safety net”.

Those landlords, familiar with the LHA market, may recall there were similar red flags being raised about LHA prior to its introduction in 2008; mainly because of its default position of paying the tenant, rather than the landlord. Since then around 70 per cent of those tenants who received LHA have handed it over to their landlord. In around 30 per cent of cases, “safeguarding” has been used to re-direct payment to landlords because of some tenants reneging on payment. Nearly six years later the LHA “safeguarding” provisions are well established and understood by councils and landlords alike; the system overall works well. Given this experience, the RLA advocated that the Coalition Government needed to soften its approach on the question of direct payments within the Universal Credit scheme. In the past few months we have evidenced quite a bit of shift in the right direction by the announcement of “Landlord Managed Payments“. The RLA welcomed the move but continues to argue for no less than parity with the current arrangements as they are both well tested and proven.

Landlords with LHA tenants can be further reassured by the leaked DWP report that the planned national rollout is likely to be delayed until after the 2015 General Election. By that date, it’s anticipated no more than 25,000 of the simplest Jobseekers’ Allowance cases will have been transferred via the Pathfinders, compared to the initial target of 12 million by 2017. To date just over 2,000 have claimed Universal Credit, whereas the Coalition first estimated one million in year one.

Pushing back the date in this way, and considering the complete lack of confidence in the ability of the Department for Work and Pensions (DWP) to deliver, it appears LHA will continue to be a critical source of revenue for housing associations and private landlords, way beyond its planned abolition date of 2017.

The RLA is at the heart of the Universal Credit debate in Westminster and is continually fighting for the best deal for landlords. We have responded formally to the DWP consultation on Universal Credit and housing costs and given oral evidence to the DWP select committee in December 2013.  We have also given evidence to the London Assembly on welfare reform and housing and will maintain our defence of the sector by continuing to press for further concessions.

Bill Irvine is the RLA’s dedicated housing benefit consultant and expert. A landlord himself, Bill was head of benefits and revenues at one of the UK’s largest councils. Bill currently runs HB Advice & Advocacy, and acts as representative of private landlords, housing associations, and tenants, in their housing benefit/Local Housing Allowance (LHA) negotiations with councils and, uniquely, represents before first and upper-tier tribunals. He also writes regular articles on housing benefits/LHA related topics and responds to landlord’s queries and complaints via various web-based forums. For more information visit http://www.hbadvice.co.uk/ or http://www.ucadvice.co.uk/. Alternatively, contact Bill by email at bill@ucadvice.co.uk, or by phone on 01698 424301 or 07733 080 389.

Need training on Universal Credit or LHA? The RLA can help

Bill Irvine runs a series of training workshops onUniversal Credit and the Benefits Cap’ on behalf of the RLA. These workshops focus on what’s already happened within Universal Credit and what you can do to mitigate the effects, now and in the future. Being aware of this information and potential mitigation strategies should enable you to assess your current situation and plan for the future:

Still worried?

Finally, we would again encourage members to get in touch if you do have any concerns, and to take the time to fully familiarise yourself with facts, in this period of change and uncertainty, before making any hasty decisions.

Please email campaings@rla.org.uk if you would like more information.

Further information

Bill has also written a number of articles for the RLA that you may find useful if you are worried about Universal Credit. You can read the articles in full by following the links below:

About the author

RLA

RLA

The Residential Landlords Association (RLA) represents the interests of landlords in the private rented sector (PRS) across England and Wales. With over 23,000 subscribing members, and an additional 16,000 registered guests who engage regularly with the association, we are the leading voice of private landlords. Combined, they manage almost half a million properties.

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  • The “safeguards” in place are inadequate, Fergus Wilson is not going to rent to LHA tenants when their are working tenants that are safer.

    The Safeguards – just are not safe enough. With overpayments, suspension and other issues stopping LHA being paid even with a safeguard in place. Landlords often obtain Rent Guarantee but this is unavailable with LHA tenants!

    Its a risky business, especially with the current possession procedures taking months on months.

    IF LHA tenants are your only option – then sure. If you have other options then LHA tenants are a risky strategy.

    • Adam,

      We appreciate your comments, and that will indeed be the opinion of other landlords as well; but what Bill highlights is that LHA is still a safe way of a guaranteed rental income for many landlords, and that the system works perfectly well for them.

      Furthermore, whilst Universal Credit is in the headlines on a daily a basis (as is the supposed threats of immigration) a lot of the rhetoric is sensational and alarming. The fact that Universal Credit is being hampered by delay and confusion means its full implementation is unlikely to impact on the average landlord for many years yet; so LHA will not be going anywhere too soon.

      Kind regards.

  • We are landlord to many families receiving housing benefits. We are now very concerned with the indebtedness of our tenants to us since the universal credit scheme was put in place.. Even though we receive at this point the monthly rent minus the universal credit factor direct to our account from the council. Our tenants for the most part are saying they can not pay all the difference between what we are being paid by the council according to the new universal credit scheme and the chargeable rent for those particular properties. In some cases we are owed six months difference which is accumulating with little hope of recovery. We are charging local rates for our properties so there is no real upside for us to continue renting to people receiving housing benefits as there is no real means of recovery for damage or back rent and the council each month is stopping our payments because of this or that or the other reason. It is a very unworkable situation at the moment and as a result we have issued section 21 notices to all of our tenants. It is worth noting that we have been landlords to people on housing benefits for many happy years until the implementation of this universal suffering scheme.

  • And what about those tenants who use housing benefit as spends? Why isn’t that treated more seriously by local authorities?

  • I am a Landlord (Business) but i also are a garentor (Private) i now have to pay all the rent for that person as they are recieving no housing benifit as they have got to apply for new benifits, when they get it back it still will be less than half the rent, they do not have addisional rooms, the main person is bouncing from JSA to ESA not of his own choice but the Govenments. Then i get asked as a Landlord to take people on benifits and i have to refuse. I have one cleint getting benifits but they are low income, their benifits are twice as large as my family.
    How can this be fair oh yes he is a year older !!

  • Very interesting article.

    “It must be evident to the Government that LHA landlords are playing a key role in providing accommodation to ex-social tenants, displaced by changes like the bedroom tax and benefits cap. Chronic waiting lists and housing shortages all over the country mean that private rented accommodation is now more in demand than ever as a housing “safety net”.

    However, not all tenants who require housing benefit are ex social tenants or in need of a safety net or vulnerable. Increasingly housing benefit is needed by hard working families and individuals unable to cover the full cost of rent on their earned income. Income to rent ratio has increased which has led to more working household claiming housing benefit and now Universal Credit.

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