The Residential Landlords’ Association’s (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, the controversial landlord who attracted the spotlight last week for serving eviction notices on 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.
Guidance on Universal Credit
Bill Irvine is the RLA’s dedicated housing benefit consultant and expert, you can read more of his articles here. A landlord himself, Bill was head of benefits and revenues at one of the UK’s largest councils, he currently runs HB Advice & Advocacy, for more information or to contact him directly, please visit www.hbadvice.co.uk/ or www.ucadvice.co.uk/.
Bill runs a series of workshops around the country with the Residential Landlords Association on Universal Credit and Local Housing Allowance. 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. For more information and details on courses in your area, click here.
Are tenants on benefits not your only worry?
2013 brought a wealth of changes to the housing sector…immigration, licensing, bedroom tax and much more…
That’s why the RLA have put together a guide to all the changes of 2013 and how it impacts us in 2014. Download the RLA’s free guide to 2013 today.
With the roll-out of Universal Credit beginning last year, the RLA have worked hard to provide guidance and information to our members and property professionals alike. Join the fight by becoming an RLA member today and see how we can support you.