Kate Faulkner, Propertychecklists
According to Rentify, the Department for Work and Pensions released figures that showed in November 2013, there were nearly five million people claiming Housing Benefit.
Currently, the new way to pay people via Universal Credit is being implemented in Hammersmith, Rugby, Inverness, Harrogate, Bath and Shotton, for single people who have recently become unemployed. What it means is, that all other benefits stop – including housing benefit – and all payments are ‘lumped’ into one.
It’s expected Northern Ireland will implement in the summer of 2014 and by the end of 2017, all housing related support will be moved to Universal Credit, with Income-related Employment and Support Allowance following suit.
According to George, “Unlike the previous system, whereby the rental amount would usually bypass the tenant and go straight to the landlord, the new scheme directs all benefits to the tenant.” George Spencer from Rentify believes this will leave both tenants and landlords “vulnerable to potential budgeting errors that may occur when a tenant is given a lump sum with which to negotiate the coming month.”
The issue for landlords as Universal Credit is rolled out – why bother? Surely it’s better to have a tenant who can pay their own way, rather than one who is reliant on receiving state benefits and then passing them on when they are on a budget to the landlord.
George explains this has already happened as in December 2013, high profile landlords Fergus and Judith Wilson refused to let their properties to tenants on benefits. Apparently the government has listened a little though “Since this announcement there has been some backtracking, for example, stating that tenants can opt to have the DWP pay rent directly to landlords.”
From George's perspective “This is still a development period and decisions will have to be made to adapt Universal Credit accordingly with the needs of both tenants and landlords. It would be catastrophic for government to isolate welfare applicants from the private housing market so more changes like this will be inevitable.”
Other things George and Rentify think would be beneficial to tenants on benefits and landlords renting to them include:-
George concludes though “landlords must not be put off or panicked by Universal Credit. Cutting out a whole network of renters would be destructive to a portfolio’s worth, not to mention how such actions would affect the public’s opinion of landlords.”
George Spencer, Rentify
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