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.

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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.”

Painful

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.

Watch the select committee session in full.

3 COMMENTS

  1. I don’t think Ben Beadle’s suggestion of landlords not being allowed to know whether tenants are on benefits is at all helpful. Landlords are taking significant risks when taking on a new unknown tenant, and they need to know whether the tenant has a financial stake in the tenancy or is essentially getting a ‘free’ house on the state, and whether the tenant has financial substance which can be targeted if they fail to fulfill their side of the contractual agreement. Insurers charge more for properties with DSS tenants for a good reason – they are riskier on average. Landlords should have a right to more info on tenants, such as criminal records and previous defaults, not less, so that they have as true a picture as possible of the people they are potentially contracting with.

    • I entirely agree with John….

      There is a view in law that “Ignorance is no defence” Meaning that in theory every citizen should be aware of every law in the UK and claiming someone didn’t know a law existed is not a defence that can be used in court.
      So for me it follows that the landlord has every right to know the risk that is being taken on.

      No different than an insurance company having a very long and detailed questionnaire about an applicant filled out in advance of any agreement being made.
      Exactly the same for a mortgage, can you imaging a Bank not wanting / needing to know that they were lending to someone on benefits.
      If that idea actually came in to official thinking the current trickle of landlords leaving the PRS would turn into a tsunami. I for one would sell up and invest elsewhere.

      I understand the thinking behind his statement its the same reason we don’t have benefit vouchers or food stamps so that at the checkout everyone is viewed the same. Unfortunately, we don’t live in a hippy utopia of peace and love. We live in a society that has, drug addicts, petty criminals, prostitution, cannabis farms etc etc
      If everyone was perfect there would be no need for a police force and courts would not exist.
      It’s great in theory but not in practice.

  2. It generalky ISN’T DSS tenants that are the problem.

    It is the Welfare System that provides for them.

    This Welfare system is fundamentally anti-PRIVATE LL.

    That is why LL refuse to let to DSS tenants or should I say as indeed Social Housing providers state

    No applicants with

    Limited entitlement to welfare assistance

    LETWA……………………..DSS to you and me!!

    The mere fact that the HB element could be as much as £0.50pw which results in tenants believing they shouldn’t use their other benefits to pay the contractual rent.

    The HB or rather the contractual rent should be calculated first and paid directly to the LL without any ‘clawback’ possibilities from the Welfare cheque.

    If that means the tenant has fewer other benefits because of the OBC then the answer would be to MOVE to cheaper accommodation.

    Which was the whole point of the OBC and rightly so.

    Those who refuse to bother to work at least 16 hrs pw can’t avoid the OBC.

    But if they did bother they wouldn’t be subject to the OBC.

    Those with a spare room could take in a lodger which would pay for the SRS.

    I’m afraid many on welfare remain feckless when there is plenty of opportunities to avoid the OBC and SRS.

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