Landlords believe the government’s rent payment packaged for private tenants is not fit for purpose and is a failed system, MPs have been told.
The comments were made via video link by NRLA chief Ben Beadle to a parliamentary select committee, which is looking into how well the system of helping private tenants in receipt of Universal Credit pay their rent is working.
Approximately 25% or private renters or 3.25 million people in the UK are in receipt of what used to be called housing benefit but it now rolled into Universal Credit payments.
In England and Wales the system is moving to a model of support comprising the housing cost element of Universal Credit determined by the Local Housing Allowance, constrained by the benefits cap and removal of the spare room subsidy, and topped up where necessary by a discretionary payments.
The concern for many landlords, apart from difficulties getting rent paid direct to landlords where tenants can’t manage their finances, is that only 46% of private tenants on Universal Credit have their rent paid in full by the benefit.
“I think the very fact that we have a discretionary payments system is the sign of a failed system,” said Beadle.
“Landlords and tenants shouldn’t be expected to rely on emergency stop-gap payments like this.
“The system, although well intentioned, is in need of an overhaul as payments do not meet their housing costs and that poses real challenges to landlords and tenants alike.”
He also told MPs that getting payments up and running was painful including the five-week wait for payments to start.
He suggested that the system should be organised so that landlords are unaware whether a tenant is on benefits or not – a proposal that would end ‘No DSS’ type discrimination.
Beadle also criticised the government’s decision to freeze the LHA rates, which he said would cause significant problems down the line as private rented sector rates continue to rise, but LHA rates don’t keep up.
MPs heard from Paul Silvester, Head of Housing Options for Bristol City Council, that only 2% of PRS properties in the city had rents that were covered in full by local LHA rates.