With the Universal Credit roll-out continuing apace, it is imperative that landlords understand potential changes to tenant benefit payments.
RLA trainer, and Housing Benefits/Universal Credit expert, Bill Irvine has written the following article for RLA members to be aware of potential changes to benefits under the newly formed Government after May’s General Election. With a slim majority, nothing is guaranteed, as Bill explains:
Prime Minister David Cameron and his newly formed conservative government seized the opportunity, presented by the Queen’s speech, to confirm their manifesto pledge of introducing a more punitive Benefits Cap – reducing the cap level from £26,000 to £23,000. Prior to the election, the PM said he was determined to ensure benefits are not seen as a “lifestyle choice”.
The Government has also flagged its intention to curb payment of housing Benefit for 18 to 21 year-olds and could freeze benefits of “working age” claimants for 2 years, starting April 2016.
Whilst there appears to be considerable support for such policies from the general public, research by the Institute of Fiscal Studies (IFS) suggests cutting benefits for the least well-off doesn’t help people move into work. In contrast, the evidence suggests it simply makes them poorer, and more vulnerable to the vagaries of multiple debt, eviction and homelessness.
The Cap has most impact on large families; those with high rent levels; and worse still, families where both factors are present.
Due to the Government’s slim majority in the House of Commons the proposals are just that. It remains to be seen whether the Conservative Majority will be able to push these proposals through into legislation.
Danger for tenants
Notwithstanding the above, from a tenants’ viewpoint, all of these proposed changes will certainly make it all the more likely that they will default on payment of their contractual rent, accruing rent arrears and jeopardising the sustainability of their tenancy.
Uncertainty for landlords
From a landlords’ perspective, tenants reliant on benefit, will appear even less appealing than they were viewed following the various changes and curbs to Local Housing Allowance (LHA) levels between 2011 and 2014. The more recent announcement that Universal Credit payments would ordinarily be paid to tenants, despite what happened between 2008 and 2011, when rent arrears in the Private Rented Sector (PRS) spiked, with around 30% of LHA tenants not handing their payments over.
We need to wait for the formal DWP announcement and “impact assessment” to truly assess the likely impact of these changes but it has to be acknowledged this latest attack on “working age” tenants could prove particularly challenging for tenant and landlord alike.
Especially, when you consider the Discretionary Housing Payments’ “core funding” was cut by 25%; the part designed for LHA tenants – cut by 40%; and the part designed to assist with benefits cap has been reduced over the past two years from £75M to £50M and this year (2015/16) to £25M.
Demand for such assistance will clearly outstrip the funds currently available, unless the Government decides to inject some additional funds.
Universal Credit has been rolled out to an additional 15 Job Centres across the country. Details here
The RLA will update members as soon as we receive official word from the DWP.
A fresh round of Bill’s training on Universal Credit and LHA being in September and go into the autumn, click here for more details. The dates are:
- London – Wednesday 23rd September
- Manchester – Thursday 24th September
- Leeds – Wednesday 14th October
- Newcastle – Thursday 15th October
- Blackpool Wednesday 18th November
- London – Wednesday 20th January
- Manchester – Thursday 21st January
Bill provides services through his website: www.ucadvice.co.uk
UPDATE – June 3rd 2015
The Department for Work and Pensions has published a series of guides to explain what Universal Credit means for landlords, local authorities and tenants. They are available here
Of particular importance will be the guide on for landlords available here
The main page also includes a link to a spreadsheet which landlords can fill in where a rent on Universal Credit gets into arrears.©LandlordZONE® – legal content applies primarily to England and is not a definitive statement of the law, always seek professional advice.