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Landlords reject Government’s welfare reforms

Landlords in the private rented sector have roundly rejected the Government’s welfare reform plans for housing benefit, and point to a lack of housing in the sector to cope with the Government’s changes…

Landlords in the private rented sector have roundly rejected the Government’s welfare reform plans for housing benefit, and point to a lack of housing in the sector to cope with the Government’s changes.

Releasing details of a survey of over 1,000 landlords across the UK to coincide with the National Landlord Day conference in Edinburgh today, the Residential Landlords Association and the Scottish Association of Landlords found that 65.2 per cent of respondents do not support the Government’s plans for universal credit.

Asked whether there are sufficient numbers of shared properties in their areas to cope with the extra demand, as a result of a decision earlier this year to increase from 25 to 35 the age at which housing benefit claimants can claim only for a room in a shared property, 54.6 per cent said there was not.

Following pronouncements by Welfare Reform Minister, Lord Freud, last week that the Government’s temporary policy of allowing landlords in the private rented sector to have housing benefits paid directly to them in return for reduced rents, 62.3 per cent of respondents said they would not lower rents in return for direct payments.

The greatest concern reflected the ambivalence of the Government over the circumstances in which payments of housing benefits would be made direct to landlords. Whilst at present landlords can demand payments to be made to them when a tenant reaches eight weeks of arrears, in September, ministers failed to provide a clear pledge to retain the policy.

Asked how they would respond if the ‘right to demand’ direct payment became only a ‘right to request’, 91.6% said it would make them less likely to rent to those on benefits.

The results come as one housing association, included in the Government’s programme piloting the direct payment of housing benefits to the tenant rather than the landlord, called on ministers to enable tenants to choose who should receive the housing element of universal credit. Speaking last week Kevin Dodd, Chief Executive of Wakefield and District Housing issued a press release in which he said, “We are strongly of the opinion that under any regime tenants should have choice in how to manage their own finances.

“For those who are able to manage their own finances then direct payment as part of universal credit could give them greater financial responsibility. However, for those less able to manage their own finances, there needs to be the option to pay housing costs to the landlord.”

Commenting on the results, Alan Ward, chairman of the Residential Landlords’ Association said, “These results clearly show deep concern on the part of landlords about the direction that the Government’s universal credit policies are taking.

“The uncertainty being created by Ministers’ failure so far to issue regulations concerning the circumstances under which payments would be made directly to landlords is causing uncertainty for landlords and concern about renting to those on benefits.

“Ministers have already allowed payments to be made directly to landlords in Northern Irelandand now even housing associations they picked to pilot payments to tenants have deep concerns about the impact of the policies being pursued.

“We call on Ministers to abide by the election commitments made by both parties in the coalition and trust tenants to make their choice over who should receive the housing element of universal credit.”

John Blackwood, director of the Scottish Association of Landlords, commented, “It is clear that the uncertainty around the Government’s plans for universal credit is having a damaging impact on the private rented sector.

“Tenants on benefits need protections in place to ensure their rent is paid when things get difficult, whilst landlords need assurances that rent arrears won’t mount up. The basis of trust upon which the sector depends is being eroded by the Government’s plans.

“Following his election in 2010, David Cameron pledged a new culture of respect for the devolved institutions. Having respected the wishes of Northern Ireland, it is time that the same respect was shown toScotland whose Government has called for the same thing.”

Further information

  • 1,023 landlords from across the UK took part in the RLA/SAL survey between 22nd October and 5th November
  • In January the age limit at which housing benefit claimants could claim only for a room in a shared housing increased from 25 to 35.
  • Speaking at the National Landlords Association annual conference last week, welfare reform minister, Lord Freud, said that, “…the temporary scheme to enable landlords to receive direct payments in return for a reduction in rent has been very successful.”
  • In September, responding to a written question from Mike Weatherley MP (Conservative, Hove) about the circumstances which will trigger the automatic payment of the housing element of universal credit direct to a private sector landlord instead of to a tenant, the minister, Steve Webb, responded by saying where a tenant was finding it difficult to manage their finances, options merely “could” include the payment of housing costs direct to the landlord. Read the Commons exchange.
  • Prior to the 2010 General Election, both the Conservatives and Liberal Democrats pledged to introduce the principle of tenant choice. Speaking in October 2009 to Crisis, the then shadow housing minister, Grant Shapps MP argued that, “…I can see no reason why people on Local Housing Allowance shouldn’t enjoy the freedom to have their housing benefit paid direct to their landlord.” Similarly, during the 2010 election campaign, the Liberal Democrats’ then housing spokesperson, Sarah Teather MP told the “UK Landlord” magazine, “The Liberal Democrats opposed making it compulsory to pay tenants housing benefit when the new LHA rules were proposed, and we continue to feel that individuals should have the choice. Many people genuinely don’t want to manage their rent and feel safer if their housing allowance is paid directly to their landlord.”
  • Speaking to the Scottish Parliament’s Welfare Reform Committee last week, when asked for her response to the decision to allow Northern Ireland landlords to receive housing benefits directly, the Deputy First Minister, Nicola Sturgeon MSP said, “…as I understand it, the main changes that have been agreed in Northern Ireland are as follows: the housing cost element of universal credit will go directly to landlords rather than the claimant; it will be possible to split payment of universal credit between two parties in a household; and universal credit itself can be paid twice a month. I want Scotlandto have the opportunity to implement such changes and we will certainly use the Northern Irish example to strengthen our hand.” Read Nicola Sturgeon’s comments in full.
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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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