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finding a home on housing benefit

Finding a good home on Housing Benefit

Finding a decent home is more difficult when you receive housing benefit

Landlord News by: Madalena Penny

With rental caps being placed on housing benefit, more landlords than ever are reluctant to offer tenants in receipt of LHA (Local Housing Allowance) a home.

Strangely enough, in this day and age, it’s not any stigma attached to tenants on benefits that put the prospective landlord off – it is in fact the policy surrounding the pantomime that the government expects the private landlord to follow, if they want to provide housing for LHA tenants.

Along with the rent caps, the move from housing benefit payments to Universal Credit are giving many private landlords headaches and stress. Delays in benefit applications, being given no information or updates on applications, make renting houses to tenants in receipt of benefits, a most unattractive prospect.

But the worse aspect of letting properties to LHA tenants is the non – direct payment of rent. Rents paid to the tenant instead of direct to the landlord have put more pressure on investment in the private rented sector that even the ill – advised withdrawal of mortgage interest relief on properties.  No, instead this outdated mode of rent payments by local housing benefit, has resulted in millions of pounds of rent arrears. Families have been made homeless, and houses have been repossessed by banks as landlords struggle to meet their mortgage payments in the face of tenant rent arrears…all courtesy of government policy, amid a housing shortage crisis.

For council tenants, social housing landlords need only wait 4-weeks or 1 month’s rent arrears before they can apply to Housing Benefit for direct payment. However, for the private landlord, he needs to wait 8 weeks before he can apply. Yep, it’s one rule for one, and a complete other if you’re a private landlord. Is there any wonder why homelessness is on the increase?

Research undertaken by the NLA (National Landlord Association) last year revealed that only 2 in 10 landlords would consider renting to tenants on benefits. Further research by the RLA in the third quarter of last year showed that 38% of private landlords experienced significant arrears. For Universal Credit tenants, the average amount owing was £1,150, and in the past year, 29% of landlords had evicted a tenant on housing benefit owing to problems with arrears. In fact, only 13% of landlords participating in the survey, when asked, would rent properties to tenants on Universal Credit. 63% of members said they were unlikely to offer homes to tenants receiving Universal Credit due to the lack of direct rent payments, where rent benefit is given to tenant and not to the landlord. Landlords, also have no way of knowing if rent has been paid to tenants, and leaves property investors in this sector vulnerable. When asking the DWP advice on Universal Credit and rent, 45% of landlords found them very unhelpful. The RLA represent over 50,000 landlords in England and Wales, so this information reveals a serious snapshot of the future of property investment and the struggle to find good housing for tenants in receipt of benefits.

The flip side to this situation, could also see a rise in the rogue landlord. When a landlord can choose to rent out a property to someone working and someone in receipt of housing benefit, it’s a no-brainer who the landlord would prefer. This gives rise to some serious thinking on the state of accommodation offered to tenants on benefits. Those less desirable properties, the rackman-esque landlord that seeks to profit from their tenant’s misery and vulnerability, could well make a comeback if this situation is not monitored. Many tenants are afraid to make complaints about their landlord in case the landlord issues them with a section 21 notice and they find themselves out on the street.

According to a survey by the Cambridge Centre for Housing and Planning Research on behalf of the Joseph Rowntree Foundation, more than a whopping 40,000 tenants were evicted in England alone in 2015. The study showed that the benefit changes and soaring rents are causing rent arrears to rise.

Housing Benefits, Universal Credit and the Private Rented Sector

Housing Charity ‘Shelter’ fear tenants in the private rented sector could become homeless, effecting more than a million households.
Director of Campaigns and Policy for the charity, ‘Anne Baxendale’ said: “We are deeply concerned that the current freeze on housing benefit is piling a huge amount of pressure on to thousands of private renters who are already on the brink of homelessness”.

While much is written about the rising rents in London and the South East, government must be reminded that smaller places are suffering from the housing drought in much the same way, and a new look at the impact on both tenants and landlords from housing benefit policy must be looked into.

In Sefton there are 8,520 private rented sector tenants in receipt of housing benefit, In Liverpool, 16,096, Knowsley. 3,839 and in West Lancs, a further 1,722 are paying rent on benefits.

While not in the same league as the numbers occupying private accommodation in the South East and London, it does convey the amount of households’ dependent on private landlords. If these landlords are forced out of the sector due to a Dickensian housing policy, the strain put upon the social housing sector would be catastrophic. More investment is needed, and government policies should make this more attractive to private landlords in the long-term, not penalising them.

 

Housing Benefit Rates – Southport, Greater Liverpool and West Lancs

Greater Liverpool

Accommodation Per Week Per Month
1 Room £ 57.77 £251.02
1 Bedroom £ 90.90 £394.98
2 Bedroom £104.89 £455.77
3 Bedroom £120.82 £524.99
4 Bedroom £155.34 £674.99

 

Southport

Accommodation Per Week Per Month
1 Room £ 69.33 £301.26
1 Bedroom £ 91.43 £397.29
2 Bedroom £120.82 £524.99
3 Bedroom £139.84 £607.64
4 Bedroom £172.60 £749.99

 

Greater Lancashire

Accommodation Per Week Per Month
1 Room £ 53.67 £233.21
1 Bedroom £ 89.46 £388.73
2 Bedroom £109.32 £475.02
3 Bedroom £126.58 £550.02
4 Bedroom £161.10 £700.02

 

Source(s) ONS; English Housing Survey; RLA; NLA

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