Welfare Reform and Homelessness

Blog: Shelter report misses target and offers no solutions

John Stewart
Written by John Stewart

John Stewart, RLA policy manager and landlord, on the real reasons landlords are reluctant to house benefits tenants.

Today’s report from Shelter and the National Housing Federation, pointing the finger at agents and private landlords for discriminating against tenants claiming benefits has infuriated many working in the sector. 

Just like statistics that claim the ending of private tenancies, not the rent arrears that led to serving notice, are the leading cause of homelessness, rather examining the underlying causes, we get a sensational headline that fails to scratch the surface of the issues.

Worst still, it offers no solutions, other than seeking to prosecute agents and landlords and have the practice outlawed as indirect discrimination. 

So, what is the reality of the situation?

In truth, there a host of reasons landlords and agents are reluctant to take on tenants claiming benefits.

Affordability

The first is obvious – affordability. Benefit levels rarely cover market rent.

Whether it’s the four-year freeze of Local Housing Allowance rates, the capping of Local Housing Allowance or the so-called bedroom tax, there are very few private rented properties within the financial reach of benefit recipients.

‘No DSS’ is a short-cut to prevent tenants spending time and money applying for properties they could never pass referencing for. 

And there’s another issue.

Many referencing companies will also routinely reject benefits income when assessing potential tenants.

So, tenants (or after the fees ban, landlords and agents) will needlessly pay referencing fees, only to fail the check.   

Other service providers also get in on the act.

Rent protection insurance?  Not of your tenant is claiming benefits.  Or a much higher premium.

Mortgage providers?  A surprising number still have terms that prevent landlords letting to tenants on benefits, despite the claims of UK Finance.

And they resolutely refuse to address historic restrictions.

There are hundreds of thousands of older mortgages with these restrictions.

I’ve yet to hear of a single lender who has written to customers to confirm such clauses are no longer valid. 

Repossession

The repossession process does little to help. The time taken to recover a property, whether through a s8 or s21 notice is excessive.

And despite the Homelessness Reduction Act placing new duties on councils, we continue to hear about cases where the local authority tells tenants to stay put until the bailiffs come.

Little wonder that landlords want tenants with reliable income and a good payment history.

And if the tenant is evicted or otherwise leaves the property, landlords are left with little hope of recovering any arrears, as deductions from benefits can only be applied while they remain in the property.  Arrears do not follow the tenant. 

Finally, there is the operation of the benefits system itself – not helped by Universal Credit.

Universal Credit

Direct payment of housing costs to tenants means money intended for rent may never find its way to the landlord.

Even where the landlord can secure direct payment, if the tenants claim is fraudulent, or there has been overpayment due to DWP miscalculation, it is the landlord who is pursued for repayment, not the tenant.

Under Universal Credit payment in arrears means almost certainly starting a tenancy two months in arrears.   

Perhaps the most galling part of the report is the involvement of the National Housing Federation – effectively the union for social housing providers.

The same social housing providers who routinely reject prospective vulnerable tenants by applying strict affordability tests.

Who shout about the billions in housing benefit paid to private landlords, but who receive twice as much themselves – and who now complain the private sector isn’t housing people on the very benefits they resent we receive.

Who have moved into the market rental sector, often in partnership with big, build to rent corporate investors to provide high end housing to working professionals, but complain that they can’t build social houses any more.

While there may be some truth that vulnerable tenants are struggling to find social housing because of a lack of Government support for the sector, the hard-nosed business practice of many housing associations must carry its share of the blame. 

Solutions

But what about solutions?  Apart from an aside about lenders’ terms, the only solution is to take agents and landlords to court, claiming indirect discrimination.

This only perpetuates the ‘them and us’ attitudes within private renting between landlords and tenants. 

Private landlords see tenants who are claiming benefits as a group, as a higher risk.

The key to widening access to the private rented sector for these tenants is to reduce that risk.

This is something that is understood by the homelessness charity Crisis.

Their rent guarantee and bond schemes help many people into private rented accommodation by taking on some of that risk.

The success of such schemes, and landlords willing ness to engage was confirmed by research carried out by Crisis and Sheffield Hallam University, in partnership with the RLA.

More councils could adopt or fund third parties to deliver these schemes.  It would be cheaper than providing temporary accommodation

Shelter have been strangely silent on welfare reform.  Perhaps they have taken their foot off this campaign pedal, in order to get their other foot in the door of Downing Street? 

But it has been clear for some time that both levels of housing benefit and the system processes are real deterrents for landlords, when it comes to renting to claimants.

Lifting the LHA cap and unfreezing LHA levels would be a start and bring more private rented properties within reach. 

Changing attitudes

Revisiting the dogmatic adherence to paying housing costs direct to the tenant as default and restoring tenant choice about payment to the landlord would go a long way to changing landlord attitudes.

Where landlords are paid direct, a different approach to clawing back payments where there has been a mistake by DWP, or the tenant has made a fraudulent claim could make a difference.

Recognising the complex nature of private renting businesses, the restrictions imposed by service providers and products that landlords and agents rely on could have changed the entire tone of discussion.

Shelter could have highlighted the constructive alternatives.

Instead we have yet another attack on private renting, demonising agents and landlords and polarising the debate.

If we should have learned anything from Brexit and Trump, it is that constant attacks lead only to entrenchment of positions on both sides.  And that will help no-one. 

Learn more

Want to learn more about longer term tenancies and welfare reform? Come along to our Future Renting conference on 13th September in London. Join over 200 property professionals and hear from an unmissable line up of speakers as they discuss the key issues that matter to your lettings.

About the author

John Stewart

John Stewart

John is the Policy Manager for the RLA. He has over 20 years experience working in politics, as a successful election agent, MP’s assistant, local councillor and council leader, and is a former charity chief executive.

He oversees RLA policy work across all levels of government – central, devolved and local – working to ensure that landlords’ views are represented and officials, MPs, Assembly Members and local councillors have key information and evidence about the PRS before they take decisions.

12 Comments

  • Here is my take on it:
    Gees,
    When will these people EVER COME TALK TO US?

    I’m one of the biggest Housing Benefits HB Landlords in the UK Shelter if you are listening.
    I have loved HB for years, the people are normal. I, don’t laugh at this, used to refuse working people ha ha.
    I now after 20 years don’t want HB. Why not? Come ask me newspapers as long as I han’t got to have me photo taken. Come ask em Radio stations?

    I don’t take HB any more-Come take me to court, because the Govt & Councils change the rules when we’ve already got the tenants in.
    I’ve only ever took 4 or 5 tenants to court for eviction. And the reason is? They’ve lived there 5 10 years & then all of a sudden, the Govt gave them the Benefit Cap. No one could foresee this 7 or so years ago.
    But you Mr Govt dimwits, didn’t cap them directly, you took the money out their HB to landlords. So tenants didn’t get capped, so what did they learn? Nothing. We the Landlord lost the money, you STOPPED paying their rent because these 4 kids they’ve had for years, you now decide they’ve had too many.
    You din’t do it on new babies, so they had warning, nor did you did it before they moved in the house & said If you move in there, we not paying the rent. YOU DID IT WHEN THEY WAS ALREADY LIVING THERE FOR YEARS!!!!!

    That’s why Shelter, some of us don’t take HB any more.

    The Govt also approx 2012 stopped paying the normal 1 bed £90pw for anyone under 35. It used to be 25. So the 27 year old living in the house no longer could afford the rent, you’d only pay £69 for him. Where’s he getting the £21 extra from, u imbeciles?
    Why did the Govt do this? ‘Cause it saved approx £225 mil they say. Stop all HB then. Let’s make everyone homeless.

    You bought clause 24 in which stretched some Landlords to avoiding the risk on HB.

    And now, I’d say the biggest reason for refusing HB is the new Universal Credit UC system u numptees. You paying the tenant direct the RENT FOR THE HOUSE. I say this, WHAT IS THE WORSE THAT COULD HAPPEN IF YOU PAY THE LANDLORD THE HOUSING ELEMENT DIRECT? Ooh yes, the Landlord gets his rent, he pays the mortgage, & the tenant doesn’t become homeless. What an Einstein brainwave. Ooh no my dog’s just worked that out too. Seems the Govt & UC can’t.

    Ooh this morning when that was on the news, Shelter ring me, see me. I’ll tell u how it is. We only want the rent. Is that a crime?
    Sort the Govt & UC out. UC is a nightmare. We getting it fully in Nottm approx Oct 18.
    I only have 3 tenants on it so far & so far 100% failure rate. One tenant, UC paid her for approx 16 18 months AFTER I REPORTED ARREARS.
    Engage & communicate with Landlord, we WANT THE TENANT TO STAY. But they can’t stay if no rent.
    HB tenants are normally on average, more time consuming-FACT!
    I have some Letting Agent posh tenants & 1 tenant takes up approx 10 mins of my time per year.
    I have lots of HB tenant, A lot EACH ONE takes 6 hours per month.
    Do u want to ask me again while I don’t take HB.

    Sort Benefit cap out. so many thousand there back into the Private Rented.
    Sort out direct payment UC, Landlords will come flocking back.
    HB made these mistakes years ago, UC won’t listen to how HB do it. In UC’s manual is How can I make it as hard as possible for Landlord & tenant. Instead of How can we pay this rent so tenant don’t go homeless.
    There’s gonna’ be worse to come once UC goes Nationwide.
    I ain’t got a degree & I have answered why no HB. Yet Eton toffs Tory Govt der…..

    Ooh and now Nottingham Selective Licensing & other councils. You give us the most stringent conditions AFTER WE ALREADY HAVE THE TENANTS, that most HB tenants can’t abide by.

    That Shelter is why we ain’t taking HB any more. ‘Cause of the above & also you change the rules & goalposts when they already live in the house.
    Can you go in a shop & buy a Mars Bar without paying? No, you keep doing it, u get arrested.
    Why can someone live in a house & pay no rent? And now you trying to make it harder for Landlord to get tenant out when he ain’t paying any rent. Why? U don’t even know what’s gonna’ happen here, do you u dimwits. Landlords are now gonna’ go for even more squeaky clean tenants which is gonna’ exclude even more HB.

    There is your answer Shelter. And I have some VERY GOOD HB been with me 20 years. But I also have some very bad labour intensive HB. We’re getting older, we don’t want the hassle. We renting them houses & you want us to be debt collector, Social Worker, Policeman, Judge, soft touch. Get with it.
    Ring me, I’m waiting.

    I give permission for anyone to put my reply on Shelter Facebook page.

  • This is an excellent article – can you get it into mainstream media John? I was disgusted by the biased reporting on this issue, even on the BBC, no one talks about the reasons why landlords prefer not to take tenants on benefits. I have four properties which are rented primarily to couples/families but all are of my tenants are employed. It would make no sense for me to take tenants on benefits when every advert on Gumtree produces a list of potential tenants who are in full time employment. My tenants are lovely people who look after my properties and often make improvements. In the many years I’ve been a landlord (landlady) only one couple has defaulted and they asked to leave before the end of the tenancy due to the primary wage earner losing his job – I actually allowed them to stay on for a few weeks as I didn’t want them to be be out of their home over Christmas!

    Constant victimisation of landlords in the press is extremely demoralising. There is never any mention of the ever increasing costs that we have – repairs, maintenance, gas checks, EPCs, electric checks, smoke and carbon dioxide alarms, fees to tenancy deposit schemes, replacement of kitchen appliances, mortgage payments, insurance, etc. Then at the end of a tenancy there are often remedials and a certain amount of gardening or cleaning. There may be void periods where you still have to pay the mortgage and sometimes council tax. There may be fees to letting agents and for credit checks. And if you have a bad tenant, one who causes damage or gets into rent arrears the costs are much higher.

    We are made to feel like parasites because we dare to try and make a profit (even a living) out of our rental properties and run our businesses in a prudent manner – which means we dare to choose tenants who might actually pay the rent!!

  • I do not take DSS tenants especially now that payments are made directly to the tenant. I ended up with a substantial shortfall at one point and will never do it again. Its ok shelter pointing fingers but obviously they have never been in the same situation and lets face it it’s so easy to dump everybody’s welfare on the landlord. The government have shifted all blame and responsibility from themselves and the individual to the landlord. Time individuals stopped being molly coddled and took responsibility for their own lives like the rest of us have had to do.

  • I’m a landlord in the south east – in fact in a university city with academic staff and hospital staff coming for one or two years and then moving on to other places to advance their career. They are well-funded, highly-educated people of over 15 nationalities so far in my 18 years as a landlord. Why would I risk benefit-funded tenants when self-funded people want to rent my houses? The risk I’ve heard about is the long delay in processing claims. The comments above and the excellent article tell me about other problems involving the introduction of Universal Benefit.

    Lastly, no tenant has asked me for a 3-year contract because their needs may change. eg. young couples have more children and may want a bigger house or a worker may be transferred to a different city or may go for further medical training to a different hospital. I normally start with a 12-month renewable agreement but some people stating a new job ask for 6 months in case the job is disappointing. The government seems eager to push three-year tenancies onto people who never wanted them. Why not get the basics right before tying everybody up in extra red tape?

  • We have loads of hb tenants mostly good, but you do get the odds.

    When i read this article i was about to share my thoughts but Mark Roberts has said it all, spot on mate.
    We are now considering the same.

  • An excellent reply to Shelter, John. property118.com has also published an article today:
    Free advice for Shelter

  • Excellent article, Mr Stewart. Please forward it to every newspaper that writes approvingly of Shelter’s campaign. I was heartened that the Salvation Army linked on Twitter to your piece.

    A point that needs banging home is that the real cause of homelessness is too many people chasing two few homes. Landlords generally do not leave their properties empty. When Tenant A is not accepted because they are on benefits, Tenant B is accepted. Where would Tenant B go if Tenant B had the property? I doubt there is much slack in the PRS market. Furthermore, the constant attacks by the Government (applauded by the likes of Shelter) on landlords will mean some landlords decide not to rent out their houses at all, reducing the available rental stock and putting upward pressure on rents, exacerbating the problem for HB tenants.

  • An excellent article from Mr John Stewart and some excellent comments above.

    Would RLA please now use its authority to demand a response from Shelter on the points raised?

    My own fury at the persistently one-sided, blinkered, politically correct reporting of this issue in the mainstream media echoes that of the respondents above.

    I will not have my tenants chosen for me by the Government or Shelter, given the weakness of civil law in providing effective redress and the arbitrary and draconian criminal penalties that Landlords are now obliged to bear if they put a foot wrong. The rent from my properties pays for my family and secures its future in a very demanding world.

  • Shelter started its press release with “Five of England’s leading letting agents actively discriminate against tenants on housing benefit”, suggesting this was their company-wide policy, even though Shelter’s own survey showed that only a tiny minority of branches did, and so were actually out of step with company policy.

    In the same release Polly Neate accuses others of moral bankruptcy. “Rejecting all housing benefit tenants is morally bankrupt” she wrote.

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