Another reason not to accept tenants on benefits: a case study

by Dr Rosalind Beck

8:36 AM, 21st August 2019
About a month ago

Another reason not to accept tenants on benefits: a case study

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Another reason not to accept tenants on benefits: a case study

I was surprised to see that Shelter still hasn’t given up on its campaign to prevent private landlords from using the phrase ‘no DSS,’ and that it is continuing to spend its considerable financial resources on this. This is despite the overwhelming evidence in research by Openrent that 90% of tenants on benefits want to know if the landlord genuinely will accept them or not – so Shelter is doing the diametric opposite to what those it purports to advocate for would wish it to do. This represents a scandalous waste of money.

Shelter also continues to argue that it is no riskier for landlords to accept tenants on benefits (easy to say when you’re not the person taking the risks).  I believe I have thoroughly refuted this puerile argument in a previous article where I allude to the complexity of this issue, but also to the simple economics which is that Housing Benefit only covers 57% of the cost of a market rental. Why would anyone take on as a tenant someone who so clearly cannot afford to pay the rent? Click here.

However, I have come across another reason this week, which is that Universal Credit has completely shifted the risks private landlords now face with tenants on benefits; namely that landlords cannot trust the staff at the DWP even when they give their word that they will pay the landlord direct after a tenant has not passed on a previous payment.

Case study:

A colleague in Swansea had two tenants who stopped paying the rent earlier this year. He gave them a few months’ leeway, as they kept promising to pay. However, when he visited he says that they looked like they had become drug addicts and the male tenant became verbally abusive.

He therefore followed the correct procedures, completing a UC47 to get direct payments. As a precaution, he also had numerous conversations with the DWP to ensure all went smoothly. The tenants were by now over £1,000 in arrears. So the main priority was to make sure they received no more money and that it came directly to him. He also issued a Section 21.

The landlord told me:

“I knew the telephone conversations were recorded and so I made it very clear I would be claiming compensation if any more money were paid to the tenant.  My mentioning ‘compensation’ seemed to rattle the member of staff and she rang me back to tell me that there was no need to worry and that the next payment would definitely come to me during the first week of May. She said I didn’t need to take any further action as it was all set up.”

Time passed and no money had arrived in the landlord’s bank account by the 9th of May, so he rang the DWP. As usual, there was a long wait on the phone, until eventually he was told that a different member of staff had over-ruled the previous arrangement and had sent the money again to the tenant a few days earlier.

Naturally, the landlord was furious and complained to the Complaints and Correspondence Team. Unsurprisingly, after a long wait, his claim for compensation was refused and he was told that even if the DWP makes mistakes which result in the landlord suffering a loss, there is, in fact, no mechanism for compensation (which there was under the previous system). So basically, the DWP can mess up as much as they like and the landlord will pay for their mistakes.

In sum:

What I take from this is that the DWP cannot therefore be trusted to pay the housing element to landlords. The safety net which previously existed – whereby if the tenant was two months in arrears the landlord could get direct payments – has gone or at least is completely unreliable.

This brings the whole system into disrepute and acts as yet another disincentive for landlords to accept as a tenant anyone on benefits. The landlord in question is patiently explaining this to the many prospective tenants on benefits who apply for his housing. He will now only accept people in work, because if the tenant turns rogue, the authorities will enable that tenant to effectively defraud the system, the taxpayer and the landlord. There is no justice for the landlord in this new system.

I am sure that similar scenarios are taking place across the country under the new Universal Credit system. Please feel free to relate your own experiences in the comments section below. This could be a valuable source of information to pass on to Amber Rudd, Secretary of State for Work and Pensions.

I won’t, of course, hold my breath for Shelter to bring it up in one of their suspiciously easy to obtain high-level meetings with Government, however – as this would mean them championing private landlords actually receiving the rent to which they are entitled. That just wouldn’t do.



Comments

Peter

10:49 AM, 21st August 2019
About a month ago

In the 1989 recession I had four houses in Portsmouth for which I was forced to accept DSS tenants because there were no working people.
I employed two handyman full-time repair the damage they did in those four houses.
Eventually, when the economy recovered I was able then to sell those houses and move out of the area completely. In those days, we used to have direct payments, but constantly rents were not paid to me at all for various reasons. For example, the tenant was not eligible, or hadn’t and or wouldn’t fill in the forms properly and so on. Absolute nightmare.
Just thought you’d like to know.

David Price

11:46 AM, 21st August 2019
About a month ago

DWP policy has forced me to reject all tenants whose sole income is from benefits for the reasons which are stated by Peter. I have long ceased to worry about the plight of the homeless, that is the Local Authority's problem; My problem is just to keep my head above water in the light of the government attacks.
I never advertise, there is no need for I have a long queue of unsuitable tenants and a short queue of suitable tenants, but if I did advertise my adverts would definitely state "No applicants whose sole income is from benefits will be considered". Unfortunately this includes the under 35's and the disabled for even they are subject to frequent disruption of rental payments from the DWP. A bankrupt landlord is no good to anyone.

Graham Landlord

12:58 PM, 21st August 2019
About a month ago

I have said this before. I throw the gauntlet down to Shelter. Buy a block of flats or row of houses with a 100% normal BTL mortgage as a private Landlord does, without the support of your charity status or grants. Run it on the same financial basis as a private Landlord, but fill it with DHSS Tenants. Then with open transparency post your annual accounts for these properties on the web for all to see. It’s a win win for Shelter, they provide homes and prove their case with cold hard numbers. No more debates or arguments over DHSS Tenants, Section 21 Notices etc because they could prove they are right! Come on Shelter, what a publicity boost for you when you walk your talk and show us all where we are going wrong. Trust me, they won’t do this. Shelter have the resources to crunch the numbers. They actually know the reality of Landlording, but they are “Shelter” with well paid executives, what else can they do but persist with their unworkable demands and unfounded divisive propaganda.

Dr Richard Holland

13:10 PM, 21st August 2019
About a month ago

I have made three application to the dwp over 18 months and have received absolutely nothing but 4500 debt my MP got involved and I had an email from dwp wanting to discuss the applications requesting my phone number which they already had. I supplied it again and surprise surprise I never received a call. I now don't take dss tenants

Clint

13:36 PM, 21st August 2019
About a month ago

I have 13 UC tenants who are over two months in arrears out of 35 rented properties. Some are substantially more than two months in arrears, and one is seven months in areas waiting for the eviction to be completed.

One of the tenants in particular was almost two months in arrears and in fact I believe ensured that she was not two months in arrears as she knew, that it was likely that I would apply for the rent to be paid to me.

I sent the following email to UC with attachments (not included) on 29th October 2019:

Dear Sir
Please find the following attached to this email:
• UC47 Form requesting Managed Payment to Landlord & Third-Party Deductions
• Tenancy agreement
• Rent schedule showing tenant almost 2 months in arrears

I urge the person at universal credit that is looking at this case not to pay the rental element of the Universal Credit to the tenant as, the tenant has no intention of paying the rent and the tenant is contractually almost 2 moths in arrears.
Please contact me if further investigation is required however, in the meantime if necessary freeze the payments and do not pay the tenant.
Kind Regards
Xxxxxx

Following the above letter, I had no response and having contacted UC, I found that the UC assessor decided to make the payment directly to the tenant as, the tenant was not more than two months in arrears.

I then sent the following email to UC with attachments (not included) on 14th December 2018:

Dear Sir
Please find the following attached to this email:
• UC47 Form requesting Managed Payment to Landlord & Third-Party Deductions
• Tenancy agreement
• Rent schedule showing tenant almost 2 months in arrears
• County Court Judgment Against Tenant

I urge the person at universal credit that is looking at this case not to pay the rental element of the Universal Credit to the tenant as, the tenant has no intention of paying the rent and the tenant is contractually well over 2 months in arrears.
Please contact me if further investigation is required however, in the meantime if necessary, please freeze the payments and do not pay the tenant.
Please note that in my last email sent on 29th October 2018, I had informed Universal Credit that although, the tenant was almost two months in arrears and the tenant had no intention of making any payments, Universal Credit continued to make payments to the tenant without any investigation and did not inform me of anything including not confirming receipt of my email.
Kind Regards
Xxxxxx

Following the above letter, a member of staff contacted me (as the tenant was now almost 3 months in arrears), and informed me that I would get a payment on 26th December 2018 as, this was the earliest date it could be set up and the tenant was informed of this and I had also discussed this with the tenant. On 26th December 2019, the rent was once again paid to the tenant and I once again did not get it.
Since then, I followed the two stages of the UC complaints procedure and got nowhere but have yet to complain to the Director General and Amber Rudd but due to the increase of work load caused by UC and Licensing have not had the time to continue with my complaints.

To sum up, due to the flaws of UC, I did not get paid from 29th September 2018 to 25th January 2019 for this tenant and so far, it appears that nothing can be done. UC did start paying me on a monthly basis from 25th January 2019 however, the tenant has not paid any of the top ups and has built up a huge amount of arrears totalling over £5000.

If you Dr Rosalind Beck wish to use this case for any purposes, please feel free to do so

Gary Dully

19:00 PM, 21st August 2019
About a month ago

I’ll keep this simple.

This government are taking the p with benefit tenants.
The payments are the 30th percentile of local rents!
They’ve been frozen for years.
They are unreliable.
You can’t discuss the issues with the UC dept.
The tenants won’t pass it over.
They’ constantly getting sanctioned and it’s the landlords that suffer.

Ooh I just can’t understand why it’s a mystery, can you?

Dr Rosalind Beck

20:51 PM, 21st August 2019
About a month ago

Reply to the comment left by Clint at 21/08/2019 - 13:36
Thanks, Clint. Your case is very similar to the one I reported, although yours is worse. I believe this is a much worse system for landlords than the previous one as it was far easier to get direct payments before. The evidence is clear in what happened to you, but also in the arrears figures under Universal Credit. I think I might have read that arrears have doubled under UC.

The way they are treating landlords as the providers of the housing so desperately needed is a disgrace. They won't talk to us, they ignore the evidence we give them, they promise to make the payments direct, then pay the rogue tenant again, despite the fact that they are only entitled to receive the housing element because we have granted them a tenancy and put a roof over their heads. We are treated with contempt, whilst we have to fund the housing provision out of savings and even take out loans in some instances to cover the mortgage.

Once they have driven loads of landlords out of the market, they will be begging us (the councils often already are) to house the homeless. They can forget that. Who wants to be treated in this way? In any case, housing those in need is the state's responsibility, not the job of private citizens, although many of us have taken this on, at our own risk and often paid a heavy price for it. It just isn't worth it anymore.

Clint

21:23 PM, 21st August 2019
About a month ago

Reply to the comment left by Dr Rosalind Beck at 21/08/2019 - 20:51In the past, I housed many tenants who were on housing benefit where I got direct payments and many of those were there for many years. Now, it is an absolute disaster and as you say Landlords are sensibly getting out of the market.
I currently have two properties on the market where I have a buyer for one and as each one sells, I will be adding one on. Unfortunately, with BREXIT round the corner, it is very difficult to sell at present and I have only managed to get a buyer for one although, both properties are the lowest priced in the areas where I am selling.

You are very right, it certainly is not worth it anymore.

I sometimes feel my tenants are better of than me in that I am always working and they seem to have all the time in the world to do as they like and they seem to somehow be able to afford everything right up to the minute although on benefits but then on second thoughts the government has created a new society where one is rewarded with theft from landlords in payment as well as in the high tax they pay

MoodyMolls

22:09 PM, 21st August 2019
About a month ago

The benefit sector was the area I operated in. But too many trashed properties and rent arrears.
UC I only once managed to spk to some one.
I have 2 tenants on UC who are no problem another tenant it gets stopped often and there are arrears.
Landlords where possible are all leaving the benefit tenantssector. No DSS is justified and social landlords don't want them either.
When you do take them you then get accused of robbing the public source.

Bernadette Hughes

22:16 PM, 21st August 2019
About a month ago

I have a universal credit tenant and she wants us to apply to have the rent paid directly to us. However, I understand that the rent could be reclaimed from us if she is found to have claimed fraudulently. Is this really true?

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