The RLA welcomes today’s government proposals in the White Paper on Universal Credits but it’s the housing cost element, which will replace housing benefits, that causes concern.
At the moment a landlord can lose thousands of pounds because allowances are paid direct to a tenant who does not, then, pass it to the landlord. But, on the other hand, housing associations are paid direct.
Housing charities Shelter and Crisis have joined private sector landlords in urging the government to reinstate the former system that allowed tenants to opt for local housing allowance to be paid direct to their landlords.
Alan Ward, Chairman of the Residential Landlords Association, says:
“But the White Paper is unclear about changing the system. The government promised a decision on this as part of their review of the local housing allowance but the inference, from the White Paper, is that the current system will continue. And we are alarmed at this.
“Our surveys show that over 50% of landlords who currently deal with benefit tenants are going to stop doing so. But they have told us that, if local housing allowance is paid to them direct, they would stay in the market and continue to provide accommodation for those receiving benefits.”
The RLA is continuing to press for a change in the system, back to what it was, and is calling on the government to give a clear decision – especially since the White Paper says that housing allowance will continue to be paid direct to housing associations.
RLA Policy Director, Richard Jones, says:
“This is clearly not a level playing field. Housing associations are getting favourable treatment because their lenders will not loan money to them otherwise.
“Private landlords, many of whom are small players in the sector, suffer because their tenants receive the benefit payments and not them. And the same government that says it wants to support small businesspeople is hanging onto a system that inflicts financial hardship on our members.
“Landlords often have severe financial problems because tenants receiving benefits go into arrears and the ‘rent money’ is not used as intended. We strongly believe there needs to be a level playing field and private rented sector landlords should be treated in the same way as housing associations.
“The RLA is also pressing the government to ensure the new allowance is enough to cover the tenant’s rent. But, unfortunately, ministers are persisting with plans to restrict rent levels payable by tenants receiving benefits.
“Landlords are often being blamed for allegedly ‘milking’ the housing benefit system but evidence shows this is not the case. After all, local housing allowance rates are set according to rents paid by non-benefit recipients.
“Research for the Department for Work and Pensions showed that rental levels for those in receipt of local housing allowance are the same as those paid by low income working households who do not receive local housing allowance but still need support for their housing costs.
“So it is very important that the government recognises the need for the new housing allowance to reflect rents payable. Otherwise, tenants will continue ‘dipping’ into other income and never be incentivised to find work - which is what the Government wants them to do.”
