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

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

8:36 AM, 21st August 2019, About 2 years ago 19

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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

by Clint

22:56 PM, 21st August 2019, About 2 years ago

I do know that if the tenant was found to be fraudulent and you as the landlord knew nothing about it, you do not have to pay the rent back although from experience, the council will always try and claim the money from you and if you like many landlords are not aware of the regulation, would pay the money back.

I would expect that the same would apply to UC. With UC I would be surprised if you manage to get the money paid directly to you without the tenant being two months in arrears. I have on many a time tried to get the rent paid directly to me with the tenant's consent and it never happened for a tenant that was not two months in arrears.

by Bernadette Hughes

0:08 AM, 22nd August 2019, About 2 years ago

Reply to the comment left by Clint at 21/08/2019 - 22:56
The tenant has a form from the local council to send to UC requesting that the rent be paid directly to us and she wants it to be paid directly to us. But, having read on line that this could be claimed back if the tenant had been found to have made a fraudulent claim I've been to nervous to proceed down this route ?

by Mick Roberts

11:45 AM, 22nd August 2019, About 2 years ago

I'm still waiting for Shelter to come ask me WHY I CAN'T accept DSS tenants no more. Not why I WON'T, but why I CAN'T.

Shelter's way completely messes the tenant about & the Letting Agent. The Letting Agent will refuse anyway on some excuse/reason/affordability check etc. This is happening-Unofficially of course.

I've had exactly the same as this several times. Payment arranged to come to me, then someone else in UC has reversed the decision & arranged payment to go tenant who's already over 2 months in arrears.

Bill Irvine of https://universalcreditadvice.com/ also knows about the no compensation rule & is looking into answers. Landlords can use that site to get as much help as possible.

I've put the below on before, but if any new Landlords need help, please use the text.

Some tips below on the complaints procedure & also the legislation on direct payment which most UC staff still aren't following. This is to my tenants, but same addresses apply to Landlords.

If UC have messed up, u MUST complain. Otherwise it could be over a year before u get solved. Get the clock ticking down now.

Email N-EMIDLANDS.CRT@DWP.GOV.UK
& put Stage 1 complaint in subject.
In the body of the e-mail you should provide all the details of the tenant, address, NINO, DOB etc. or your landlord reference number, a summary of your concerns and the issues still to be addressed.

If they don’t reply in 15 days, write to: correspondence@dwp.gov.uk & put Stage 2 Complaint in subject
And u could just forward your previous email. Saying you have waited 15 working days.

If they don’t reply in 15 working days, you then write to ice@dwp.gov.uk & tell them you haven’t had a reply.
ICE normally say You have to have a referral from DWP. You then tell ICE Mick Roberts said YOU HAVE TO take my complaint on, otherwise DWP may as well never reply if you aren’t going to look at complaint.

You need to start complaining to get the system changed or u could be in same boat next year.

And below is some extracts of one of my recent letters to DWP complaints department which shows what u up against:

it can take 2 I repeat TWO years for a tenant who is homeless to get recourse from DWP cause ICE aren’t being given the funding they need to quickly look at complaints. Guess who funds ICE? Yes DWP, you couldn’t make that up.
I’m also copying in ICE as proof I have sent this complaint for the THIRD time to DWP. This is a joke, this should be a responsible Govt organisation. No wonder tenants give up when complaining from themselves. The whole process is designed to wear u down & make u stop.
Might as well, let’s copy in Neil Couling too, so when BBC1 ask me in 2 years time, I can say Yes they was all aware.

29 June 2019, I sent the complaint to Stage 2. No reply.

22 Jul 2019 I sent the complaint to ICE, no reply.

Thurs 9 Aug 19, 1030ish, I ring ICE, get XXXX. She says I have to write to Stage 2 AGAIN & give them 8 I REPEAT EIGHT weeks to send me a response. I find this staggering.
I say to XXXX what then if they don’t reply? Do we give them another 8 weeks? XXXX said each case dealt with individually.
DWP have 15 days to reply to Stage 2. If they don’t, then ICE must look at complaint. ICE used to say they can’t look at complaint until DWP had responded. So DWP were rubbing their hands in Glee & saying Ooh Baby, we might as well NEVER respond cause then ICE won’t ever look at complaint, we can never get investigated, Happy Days, we can get flip flops on & sunbathe in car park all day.

ICE then changed tack (took about 2 years) to then offer to take the complaint on if we gave DWP a few more chances.
But to now give DWP another 8 weeks beggars belief. People are being made homeless here & one day the Media will pick up on this & ICE will get the funding it needs to sort this fiasco out.
ICE takes EIGHTEEN months to look at the complaint once they finally receive it. No Landlord can wait 18 months with zero rent coming in to pay out big mortgage.
Why have these rules of 15 days if ICE, the regulator are then going to ignore them?
When you do get forced to sort all complaints within 4 weeks or so, imagine no more moaning from me & the country’s homeless reduces. That has to be a good thing, doesn’t it.

The real losers here are the vulnerable tenants who can no longer move house as no one is taking UC any more, & we wonder why the country’s homeless is rocketing.

DWP guidance on MUST pay Landlord if LHA HB is already being paid direct to Landlord.

Direct payment to Landlords when switched from LHA where LHA is being paid direct to Landlords, UC HE HAS TO BE PAID DIRECT to Landlords:

The DWP link can be found here: https://www.gov.uk/government/publications/universal-credit-landlord-engagement-newsletters/february-2019-universal-credit-landlord-engagement-newsletter

The bit you’re looking for is below, highlighted for you.

2.4 When can a Managed Payment to a landlord be requested?

A Managed Payment to a landlord can be made when either:

· a claimant is in arrears with their rent for an amount equal to, or more than, two months of their rent

· a claimant has continually underpaid their rent over a period of time, and they have accrued arrears of an amount equal to or more than one month’s rent

· any of the other Tier 1 and Tier 2 APA factors apply

Or for private sector tenants:

· a claimant was previously in receipt of Housing Benefit and it was paid to their private landlord, a Managed payment to landlord can be considered providing the claimant continues to meet the Tier 1 or Tier 2 APA factors

This is part of the conversation Universal Credit staff will have with the claimant at the start of the claim.

Also:

Direct payment to Landlords doesn’t need explicit consent. UC HE HAS TO BE PAID DIRECT to Landlords.

You cannot under any circumstances ask the tenant & then take their word for it that they aren’t in arrears & then pay them putting their shelter at risk

“Explicit Consent” was removed in December 2017 supposedly putting a stop to tenant’s misusing the “housing costs element”. (HCE)

https://www.gov.uk/government/publications/universal-credit-detailed-information-for-claimants/universal-credit-consent-and-disclosure-of-information

2.2 Disclosure of information to private landlords

Private landlords are landlords who usually own the property they are renting out.

Private landlords can be:

a company that owns a lot of properties

a person or family that owns one or more properties

Private landlords can ask for their tenant’s Universal Credit housing costs to be paid directly to them without the need for explicit consent.

You will be informed that the private landlord has requested that the Universal Credit housing costs be paid directly to them.

If you are happy for your Universal Credit housing costs to be paid directly to the landlord, you do not need to reply to give your consent.

The Universal Credit housing costs will then automatically be paid to the landlord each month. If you do not want the rent to be paid directly to the landlord, you can dispute this.

You will need to provide evidence that you are not in rent arrears in order to dispute the alternative payment arrangement.

by Luke P

13:20 PM, 22nd August 2019, About 2 years ago

"Why would anyone take on as a tenant someone who so clearly cannot afford to pay the rent?"

It's not just a matter of decision for the LL as to whether they want to take such a risk, the law will not support a claim for arrears if the LL let to someone without reasonable ability to pay. Most do not know this and we are, effectively, obligated to ensure affordability.

by Clint

15:50 PM, 22nd August 2019, About 2 years ago

Reply to the comment left by Bernadette Hughes at 22/08/2019 - 00:08The form is a UC47 form. I cannot advise you to agree to have the rent paid to you but I personally would love to be in the position where I have the choice of the rent being paid to me. I would without hesitation request that the rent is paid to me as on a balance of risks from past experience, I would feel much safer that the rent is paid to me as, I believe the risk of not being paid by the tenant is much higher and have tried on many occasions with agreement with the tenant to have the rent paid to me but have not been successful until such time as the rent is two months in arrears.
I would be very interested if there is anyone out there who knows a method of ensuring that UC makes payment directly to the landlord on every occasion if the tenant is agreeable with this.
I have had cases in the past where tenants on housing benefit started work and did not inform me or the council and the Housing Benefit continued to be paid to me until they were found out. The council tried to recover the money from me however, I informed them that I was not aware that the tenant had started work and under the circumstances did not have to pay back the monies.
I would assume that the same would apply to UC.

by Mick Roberts

16:34 PM, 22nd August 2019, About 2 years ago

Reply to the comment left by Clint at 22/08/2019 - 15:50
Clint,

I've got 14 tenants on UC so far, 13 being paid direct, the 14th one I wasn't bothered.

If u can get my number from someone & bell me Mon to Fri 8 to 5, I can tell u what I do. I don't want to publicise it too much, as the DWP would love to close my access loopholes I have. And I do help & love to help all Landlords, this however, the people involved have already said if any other Landlord contacts them, they would have to stop me too.

It's not cast iron guarantee, so don't get excited.

by Larry Sweeney

17:08 PM, 22nd August 2019, About 2 years ago

All excellent and valid points. I want to in particular focus on the point raised by Graham Landlord. Graham this is an excellent challenge but one which Shelter will run from. They know it would bankrupt them. They refused time and again a request by the Alliance to bond benefit tenants.
It is high time Shelter was disbanded. A £60M charity which provides zero accommodation.

by Graham Landlord

8:37 AM, 23rd August 2019, About 2 years ago

Reply to the comment left by Larry Sweeney at 22/08/2019 - 17:08
Hi, In 2011, Shelter on TV said that Landlords were rising rents and exploiting the poor. ITV asked me to comment. I offered to go head to head with Shelter and their stupid comments, on air. Shelter declined. You note they never debate on TV with real Landlords. I would thrown the gauntlet at them. ITV did a bit on it, but my gauntlet offer was edit out. see

https://www.youtube.com/watch?v=j8ALKLzq7IA

Regards Graham

by MoodyMolls

13:17 PM, 24th August 2019, About 2 years ago

New Universal Credit research for the RLA

This week we published the findings of new Universal Credit research for the RLA.

The research, which can be read here, reveals that:

54% of those private landlords who have let to tenants on Universal Credit in the past 12 months have seen them fall into rent arrears
Of these, 82% said that the arrears only began after a new claim for Universal Credit or after a tenant had been moved to the Credit from housing benefit.
68% of landlords said that there was a shortfall between the cost of rent and the amount paid in Universal Credit.
It took landlords an average of almost 8.5 weeks for an Alternative Payment Arrangement to be arranged, meaning that landlords can be left with almost four months of rent arrears before they begin to receive the rent they are owed.
The RLA is calling on the Government to do more to prevent rent arrears occurring in the first place including:

Giving all tenants from the start of a claim for Universal Credit the ability to choose to have the housing element paid directly to their landlord.
Ending the five week waiting period to receive the first Universal Credit payment.
Ending the Local Housing Allowance freeze to ensure it reflects the realities of private sector rents.


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