Calls to scrap direct payments

by Property 118

18:38 PM, 13th November 2018
About 4 weeks ago

Calls to scrap direct payments

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Calls to scrap direct payments

On Monday 12th November, BBCs latest Panorama investigation focused on the impact of the controversial Universal Credit, and most crucially the housing element. The programme revealed the extent of the rent arrears problem as a result of changes to the benefits system. Paul Shamplina, founder of Landlord Action, together with Mick Roberts, one of the UK’s largest Housing Benefit landlords, join other industry experts in calling on the government to act now and scrap direct payments to tenants of the housing element of Universal Credit, before the situation worsens.

Under the old system, housing allowance was paid direct to councils or private landlords. Now, in order to mirror the world of work and encourage people to be more independent, Universal Credit (UC) payments are made direct to claimants. However, when combined with the cuts in benefits, tenants are under increasing financial pressure, evidenced by the 55% rise in evictions of council tenants compared to the same time last year. Panorama revealed the average rent arrears for UC claimants across the UK stands at £663 versus £263 on the old system, nearly two and half times more*.

According to Paul Shamplina, founder of Landlord Action, the changes are exacerbating the housing shortage by forcing private landlords to move away from letting to tenants in receipt of Universal Credit. In the last year, 61% of private landlords with tenants on UC have seen them go into arrears**.

It’s a deal breaker for landlords and yet the councils don’t have enough houses to house homeless people” says Paul. “We saw on Panorama that, in the last year, Flintshire Council alone has seen an 85% reduction in the number of private landlords on their books willing to rent to UC tenants. When you roll that out across the rest of the country you can see why we have such a desperate housing shortage. The system used to benefit tenants, by providing more accommodation, as well as landlords, who were guaranteed timely rent with no void periods. Now it benefits no-one. The most vulnerable tenants are being left behind, forced to use an online system which many can’t access, and landlords are having to start eviction proceedings as a last resort.”

Mick Roberts, 40, has been a private landlord for more than 20 years. He has always let his properties to Housing Benefit tenants but is now having to consider only letting to private tenants. He comments “I have loved letting to housing benefit tenants over the years and formed great relationships with many of my tenants, but I’m sad to say I can no longer do it as a direct result of Universal Credit. As an example, I have four tenants in Nottingham in receipt of housing benefit who have rented from me for over 16 years. They have NEVER had arrears.  They have all been moved to Universal Credit, and now they are all in arrears! That’s 100% failure rate.  I believe sorting the housing element would solve a large proportion of problems.”

 Panorama’s investigation appeared to echo what many industry experts has been saying for some time – the majority of tenants do not want direct payments because they openly admit they struggle to budget.

Alok Sharma MP, Minister of State for Employment, argued that UC is working well, that there have been lessons learnt in the process but that “we have is a simpler system which people understand and ultimately makes sure they get into work fast, stay in work longer and earn more.”

Mick Roberts vehemently disagrees with this: “UC has to be applied for online.  I have a tenant who doesn’t even know how to go online or have access.  They are not coming out to see the people at ground level.  If they spoke to the tenants that are affected by this, as I have, they would realise.”

Paul Shamplina adds: “I’ve raised my concerns over the increasing complexity of the scheme which, in many cases, means even staff assessing Universal Credit claims are making mistakes on an all too regular basis to the detriment of tenants and landlords. Over the next few years, thousands more families will move across to UC as the Full Service rollout expands, bringing with it even more complicated cases and further challenges for DWP staff.  Unless changes are made now, housing stock will decrease further, and homelessness will increase.  At present, direct payments to landlords are only considered in certain crisis situations. This needs to change and tenants and landlords need the option to have the housing element paid direct to the landlord.”



Comments

Robert Mellors

19:44 PM, 13th November 2018
About 4 weeks ago

The average rent arrears figure for UC tenants across the UK may be 2.5 time what it was under the old HB system, but this is because UC has not been in place in most areas for very long, so to get a more realistic idea of what the average rent arrears would be for UC claimants, you need to look at the figures for an area where UC has been in place for a year or two, e.g. Flintshire (the location of the Panorama program). In Flintshire, the average rent arrears of a UC tenant was 6 times (NOT 2.5 times) the national average under the old Housing Benefit regime. - Who wants 6 times the level of rent arrears???

Did anyone else pick up on that figure in the BBC program? It was only mentioned briefly, and the presenter did not make much of it, but 6 x the previous level of rent arrears is a massive amount.

Mick Roberts

20:58 PM, 13th November 2018
About 4 weeks ago

That's shocking Rob. I missed it.

It's so SO SO simple to solve.
Pay the Landlord direct.
What's the WORST THAT CAN HAPPEN IF U PAY THE LANDLORD DIRECT the money that's supposed to be for rent anyway? Oh yes, rent gets paid, tenant keeps home.
But no, this Govt knows best. They love bashing Landlords, but they seem to be missing a VERY important point. They bash the Landlord, they also bash the tenant. We rely on each other. We work with each other. The mortgage lender is at top of tree and Landlord and tenant are dictated by mortgage lender. Mortgage don't get paid, tenant and landlord both lose. Are the Govt that thick to not know that?

What is the worst that could happen if u pay the Landlord direct? Oh yes, the rent gets paid, and the tenant don't lose their home. How hard is that for the Govt to understand? U r crippling tenants here. 2 year old can solve.

Robert Mellors

21:25 PM, 13th November 2018
About 4 weeks ago

Reply to the comment left by Mick Roberts at 13/11/2018 - 20:58I agree Mick, it is so shortsighted of the Government, it is so bleeding obvious what is happening and yet they are in complete denial and continue to spout their delusional propaganda that "UC is working well and it's just a few tweaks that are needed". What a load of BS. - UC is not working well at all and thousands of families are suffering because of government and DWP incompetence. UC is not fit for purpose. They need to either scrap it completely, or at least remove the "housing costs" part of it so that housing costs can continue to be paid by Housing Benefit.

AA

21:33 PM, 13th November 2018
About 4 weeks ago

Mick - this is not rocket science. This is pretty straight forward economics and you being in this segment of the market should have seen this coming. Over specialisation is always a path to extinction when the environment changes. The government agenda is to deflate rents for social housing provided by the PRS. Your client base is a certain clientele. You evict them your next client is on the same platform. You are not going to get an aspirational family pitching up. Therefore your only option is to accept what your client base can afford to pay. You will have to accept less because by paying the tenant direct the tenant because of a reduction in overall allocation will use "rent" money elsewhere. This is a rinse and repeat exercise.

Mick Roberts

21:35 PM, 13th November 2018
About 4 weeks ago

Reply to the comment left by Robert Mellors at 13/11/2018 - 21:25
That Sharma Delusional MP said I know it's working well cause I've asked the job centre and the staff said it's working well.
Is he dumb? They gonna tell him what he wants to hear.
He hasn't even asked the tenants on the ground that's going skint, hungry, homeless etc. what's really happening.

Mick Roberts

5:54 AM, 14th November 2018
About 4 weeks ago

AA,
Ooh I seen this coming, my labrador seen it coming, a 2 year old saw it coming, only people din't see it coming was Sharma, McVhey, Neil Couling & most of the Govt.
Good words, over specialisation.
Ooh no, my next clientele in't on the same platform. Problem is, next clientele ain't coming cause old clientele ain't leaving 'cause can't get nowhere.
I do get plenty of aspiration people families pitching up via Letting Agent route on the rare occasions I have had one come up.
And they paying loads more. No need to accept less. Can't accept less if they keep spending.

Rod

9:09 AM, 14th November 2018
About 4 weeks ago

Am I missing something? Re social housing, if rent is paid direct to councils the money comes back !!!???

Robert Mellors

9:32 AM, 14th November 2018
About 4 weeks ago

Reply to the comment left by Rod at 14/11/2018 - 09:09Hi Rod
If the UC money for the rent is paid direct to councils, then the UC money in effect goes from one government department (DWP) to another government department (councils), so the rent arrears debt owed to councils is reduced. It's like me putting the cash from one pocket of my trousers into the other pocket!!!!
However, it is slightly different when it comes to paying UC to housing associations (Registered Social Landlords), as they are basically private landlords organisations that have agreed to charge a lower rent and be regulated by a government department, in exchange for government subsidies (cash handouts ultimately paid for by the taxpayers). So in relation to paying UC to RSLs (registered housing associations), it would reduce the debt burden carried by the RSL, which may or may not then give the government the excuse to reduce future subsidies to the RSL (or at least not have to give them more cash to stem the losses). So again, paying UC direct to RSLs would save the government money as it is almost the same as paying it to direct to councils. Using the trouser analogy, it would be like taking the cash from one pocket, and putting it into a pocket of a different pairs of trousers but owned by the same person, so ultimately no loss of cash overall.
For private landlords (and non-registered housing associations that don't get government subsidies) the situation is different because the UC goes outside of government. Using the trouser analogy again, the UC cash would go from one pocket (owned by the government), and would be put into the pocket of another pair of trousers not owned by the government, so the government loses the cash.

GREENDIZZYCRAB

9:36 AM, 14th November 2018
About 4 weeks ago

Reply to the comment left by Mick Roberts at 13/11/2018 - 20:58It took 6 months to get payments direct and that was only after I made a formal complaint of direct discrimination. The UC47 has to be submitted online via a secure email, which I and many people do not have! Then if there are any changes to the claimants circumstances their benefits are stopped so even with direct payments there is no guarantee of rent being paid. It's a complete nightmare for anyone involved and I for one sadly will no longer be offering properties to benefit claimants. So even councils will have tenants in arrears, no one escapes this mess.

Ideal Landlord

9:43 AM, 14th November 2018
About 4 weeks ago

Reply to the comment left by Mick Roberts at 13/11/2018 - 20:58
Reply to Mick,nobody outside the Landlord/Tenant relationship ie:millions of homeowners(I'm alright Jack attitude) couldn't care less.However the common denominator that bonds us all,is inescapingly 'TAXPAYERS' How alarmed would they be too that millions and millions of pounds of guaranteed @20/40% rebated revenue tax returning to the taxpayers coffers for NHS,EDUCATION + HOUSING is failing to be collected.EG:You pay Landlord direct £100 per week minus 20% tax back into government coffers=£80 per week,@40% then only costing the taxpayer only £60 per week.Then multiply this example by the hundreds of thousands total amount of claimants,exactly,millions and millions of pounds.Sheer and utter ignorance and beggars belief.Landlords can't not pay as you can safely pin the tail on that donkey,of course we have to pay and we understand that,even with s24having been implemented.Furthermore they too(TAXPAYERS)would be alarmed that their hard earned money taxes are then being squandered and misappropriated via the''cause and affect' of the existing policy to paying bed and breakfast,hostels and even hotels,sometimes quadrupling the weekly bill.Socially then precipitating dysfunctionality within family units as children being particularly impressionable, used to leading transitional lives through the upheaval process of moving accommodation,schools ie:new mates every year as moving schools and areas annually becomes the norm.They won't recognise what permanency means as they grow up ultimately manifesting itself later in life in relationships etc.Sorry to go on but the arithmetic and the ramifications are so basic politicians just don't appear to get it but the "TAXPAYERS" eventually will.Unbelievable!!

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