editor posted on October 15, 2011 02:56
More landlords could withdraw from the social housing sector if housing benefit payments, under the new Universal Credit system, are paid to tenants rather than directly to landlords, according to Landlord Assist.
The nationwide tenant eviction and referencing firm report that many landlords with DSS tenants have already been exposed to an increase in rental arrears under the current Local Housing Allowance system, because tenants fail to pass on payments.
Under current proposals by the Government, the system is set to be replaced in 2013 by the Universal Credit. This will combine all benefits into a single payment and will be paid directly to the claimant, to encourage personal responsibility. However, there is a caveat that landlords will receive payment directly should the claimant fall into considerable arrears by persistently defaulting.
Despite this arrangement Landlord Assist claim the new plans do little to secure landlords’ income and protect them from rent arrears.
Graham Kinnear, managing director at Landlord Assist, says: “There is enormous evidence which suggests that tenants in receipt of housing benefit do not pass this on to their landlords. With the cost of living increasing it is very easy for tenants to spend benefit money on other things rather than rent.
“We have dealt with cases in the past where landlords have been at risk of having their property repossessed due to tenants retaining the housing benefit and the landlord unable to evict them quickly enough in order that they can gain a rent paying tenant and resume their own mortgage payments.”
Landlord Assist has found that, under the new system, landlords are less inclined to take on social tenants, opting to only do business in the private market where tenants are more likely to have a regular income and good credit record.
Stephen Parry defends the landlords concerns, by questioning the Goverment’s refusal to take on similar responsibiilities: “If the Government had any faith in housing benefit tenants paying their rent and bills then they would operate a similar system with council tax benefit. Not surprisingly this isn’t the case!”
Rob Wellstead, Managing Director of multi award winning Lenwell said: “The Government has really set the hares running with its proposed changes to Local Housing Allowances and there is much lobbying and debate taking palce as to the final way forward. As proposed, it will undoubtedly see both winners and losers and landlords are advised to seek professional advice as to the best way forward.”