The third key ask of the RLA’s General Election manifesto is a fairer approach to Welfare Reform for landlords and tenants. This would be giving tenants claiming Universal Credit the choice of having their rent paid direct to their landlord and speeding up the claim process.
There are a growing number of tenants in receipt of benefits now living in the PRS. The most recent English Housing Survey found that 24% of private sector tenants now receive housing benefit. This figure looks set to grow as increasing numbers of councils turn to the sector to house the homeless and other vulnerable tenants.
Due to this growing demand in the sector, it is becoming clear to the RLA Policy team after speaking with members and other housing partners that Welfare Reform is a key area of importance to many landlords and tenants alike.
When we talk about welfare reform what is it that we are referring to?
Below are just some of the changes that are affecting landlords and tenants currently receiving benefits:
- The overall benefit cap
- Local Housing Allowance rates reduced to the 30th percentile
- The roll out of Universal Credit and the length of time it takes to process an application
- Direct payment of benefits to tenants
- Access to information about a tenant’s claim and any benefit sanctions
- Extension of the Shared Accommodation Rate (SAR) from 18 to 25 to 18 – 35 years old.
- Removal of housing costs to 18 – 21 year olds
These changes have created a new landscape that has seen the housing benefit market change considerably. Now landlords are more frequently faced with existing and prospective tenants potentially unable to make up the shortfall of their rent because their LHA has been cut and their benefits have been capped. Or if they are renting to a single person under 35, they will now only get the rate equivalent to a single room in a house share and they too may be unable to find the surplus money needed to cover the rent of a one bedroom property.
Then there is the challenge of Universal Credit. A totally different approach hoping to teach those receiving benefits how to manage their finances responsibly, as if they were being paid a wage to prepare them for the working world. This includes the ‘housing element’ that pays their rent. But how is this playing out in practice?
Research by the RLA into landlord’s experiences of letting to tenants on Universal Credit in 2016 found:
- Of those landlords with tenants in receipt of UC, 24% said that they were in arrears.
- As a result of UC claimants being in arrears, 33% of landlords said that they had requested that payment to cover rents be made directly to them (known as Alternative Payment Arrangements or Landlord Managed Payments) which can be put in place where a tenant gets into two months of rent arrears. Just 38% of these said that they had been successful in achieving this.
- In seeking such arrangements, 61% of landlords found the process either “tricky” or “very difficult”.
According to research carried out last year by Sheffield Hallam University, supported by the RLA, 68% of private sector landlords are less likely to rent to those in receipt of benefit because tenants are not able to choose to have payments made directly to their landlord, even when the tenant would much prefer this. This is why we are calling on the Government to trust tenants and give them a choice.
We believe that tenants receiving Universal Credit should be allowed to choose, where they feel it is best for them, to have payments made directly to their landlord to provide assurances that the rent is paid. This is a position shared with tenant groups, such as Shelter.
Direct payment of rent is unfortunately not the only challenge Universal Credit has borne. DWP has very strict guidelines in place regarding the sharing of data around a tenant’s claim which again can leave a landlord feeling unsupported and unsure of their next step as costs to them start to rise. If in the event of a build up of 8 weeks arrears or more the landlord is completely in the dark, chances are they will be more likely to serve notice. Given that the first payment of Universal Credit to a tenant can take 7 weeks including a 1 week period that those claiming have to wait before they can apply for the credit, the tenant is almost automatically put at risk of eviction.
We are calling on the next Government to abolish the 1 week waiting period required before a tenant can apply for Universal Credit and to continue to work on making the whole system more efficient.
We don’t want to see good landlords stop providing housing for those most in need and that is why we have included the impact of welfare reform in our 6 key asks. However, to ensure landlords don’t stop renting to tenants on benefits altogether we want to see the next Government take ‘A fairer approach to welfare reform for landlords and tenants’. A key part of this is to review parts of the Universal Credit process where the system is not only letting landlords down but also putting more vulnerable people at increased risk of homelessness.
For more information:
- RLA General Election Manifesto
- RLA Manifesto Key Ask #1: Boosting Supply
- RLA Manifesto Key Ask #2: Security for Landlords and Tenants
- RLA General Election: Contact Your Candidate
- Private Landlords need a better deal from Universal Credit
- Landlords unlikely to rent to under 21s due to recent benefit cuts
- RLA Guide to Housing Costs and Universal Credit
- RLA Universal Credit Training Course