A leading landlord and property developer has called for direct payments to be triggered by life events rather than arrears in a bid to prevent unnecessary evictions.

Rob Stewart, who’s developing a manifesto around solving the housing crisis, reckons the Renters’ Rights Act, which was written to protect tenants, is the reason one of his tenants is going to end up with a debt he’ll never clear.

Stewart explains that he was recently forced to serve a Section 8 after the tenant lost his job, failed to tell him, then started getting into arrears. Despite promising to pass on the housing element of Universal Credit, he failed to do so.

Under the Act, the arrears threshold for Ground 8 has risen from two months to three, while the notice period has doubled from two weeks to four. “That’s six weeks added before you can even apply to the courts for possession,” says Stewart. “Then the tenant bought himself another month for a small payment but nowhere near enough to change anything for either of us, just enough to stop the arrears crossing the line in month three.”

Waiting

The landlord applied for a managed payment of the tenant’s housing costs more than a month ago and is still waiting for a reply. He says that with his portfolio, a percentage of arrears is priced in from the start, however a landlord with one property only has the choice of selling up or pricing the risk instead: six months up front, a homeowner guarantor, income at 30 times the rent.

A managed payment can currently be requested at any point during a Universal Credit claim and triggered by rent arrears or certain vulnerability and financial-management factors. Where arrears are the basis for the request, two months’ rent is the standard threshold.

Stewart tells LandlordZONE. “The trigger is the flaw: arrears are evidence the help was needed a month earlier, not the qualification for it.”

Default

He suggests a direct payment should instead be the default where the housing element is in payment, from the opening of the claim, with the tenant able to opt out. Only the eligible element would be guaranteed, not the contractual rent.

“The tenant’s existing right to suspend direct payment over evidenced disrepair is retained and strengthened, with eligibility tied to the landlord database and ombudsman,” adds Stewart. “Not registered, or subject to an enforcement notice - no direct payment. The trigger is on the event, not the arrears such as claim opening, job loss, or hours reduced. Without this, small landlords price the risk into referencing instead.”

Debt

In his tenant’s case, Stewart argues that the current system holds him in a property he can’t afford while the debt compounds – potentially leaving him with a county court judgment.

“We haven’t protected him - we’ve given him a longer run-up to a bigger cliff.”

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