Calls to scrap direct payments

Calls to scrap direct payments

18:38 PM, 13th November 2018, About 5 years ago 25

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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.”


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Comments

Graham Landlord

10:55 AM, 14th November 2018, About 5 years ago

Whose money is it?
We pay tax into the welfare system to help people. To pay the rent for those who can't afford it so they have a home. That Tax money should not be wasted and should therfore go directly to the provider. When people are in emergency accommodation or in an Old Peoples’ Home, we don't give our Tax money to recipient of the accommodation, we give it to the Provider of the facility.
We have chosen to be Landlords, not teachers of home economics to adults. The business model is simple. We provide the accommodation and somebody pays for it. No Pay, No Stay!

James Mann

11:24 AM, 14th November 2018, About 5 years ago

This system is clearly not fit for purpose. All the years of experience in local councils delivering benefits is being thrown away for an unworkable system.
Whilst it would help for me, who has been a landlord for over 30 years to be paid directly by universal credit, I am still not prepared to be paid over two and a half months later than the contract states. It is just too much of a risk that the tenant will not have another change of circumstances or the the universal credit system will make a mistake and not be contactable under any circumstances.
I run 25 properties and although i used to house many families on benefits I am now down to two as it is clearly not a good business strategy and causes me and my tenants untold stress. The system needs to deliver the rent money to me one month in advance, be contactable to sort out issues and to give me notice of all changes/dates of payments for my tenants otherwise I will steer clear of tenants who do not have good working histories.

Mick Roberts

11:42 AM, 14th November 2018, About 5 years ago

Yes GreenDizzy,

this rubbish secure email does all our heads in. We've gone back 20 years & have to post stuff in.

Yes Ideal, I don't know why the Media ain't portraying this more, this is TAXPAYERS MONEY that is supposedly helping to pay the tenants rent, but Govt UC paying tenant direct the TAXPAYERS MONEY & he she doing what he likes with it.

Yes, we get this back in & Govt gets his 20/40% back. But not if tenant spending it on the black market.

Exactly it James, HB knows how to pay benefit to keep people safe in home. They sometimes get it wrong, but they an email or phone call away & most things can be solved. With UC, we are just a remote number.

terry sullivan

11:47 AM, 14th November 2018, About 5 years ago

heads of uc dept. should be sacked--the problem here is civil servants are deliberately undermining the roll-out to protect their non-jobs--sack the civil servants in charge--pela!

AA

21:20 PM, 14th November 2018, About 5 years ago

Someone needs to carry out a study of the money lost to HMRC by tenants withholding rent and send it to head of HMRC or some public policy committee.

AJ

19:33 PM, 15th November 2018, About 5 years ago

surely it is stealing

TheMaluka

10:06 AM, 16th November 2018, About 5 years ago

For a tenant to claim Housing Benefit I have to supply an AST, only then will UC believe that the tenant has any housing costs. Failure to pass the Housing element to the landlord should be a criminal offence. Trashing a property should be a criminal offence (it is but the police will not prosecute, https://www.property118.com/judge-to-look-into-why-tenants-are-not-prosecuted-for-criminal-damage/).

Tom Doolin

11:40 AM, 16th November 2018, About 5 years ago

As far as I'm aware one of the main reasons given to justify paying the Housing Benefit element of UC direct to the tenant was to encourage them to be more responsible and to learn how to manage a budget. Or, as the OP has said, "To mirror the world of work".
If the Government think that that's such a great idea I have a wonderful suggestion for them.
Why don't they pay every PAYE employee their GROSS wage and at the bottom of their payslip show how much Income Tax and National Insurance is due.
The employee should then be instructed to forward that amount direct to HMRC.
Lets see how long that lasts.

AA

16:27 PM, 16th November 2018, About 5 years ago

Reply to the comment left by Tom Doolin at 16/11/2018 - 11:40
Cracking observation and point.

Old Mrs Landlord

16:50 PM, 16th November 2018, About 5 years ago

Reply to the comment left by Tom Doolin at 16/11/2018 - 11:40Instead of teaching claimants how to budget over a month, this new system in fact has the opposite effect for those who are self-employed and have irregular earnings topped up by working tax credit or who are employees paid on a set date of the month. For those in the latter position the fact that they are paid on, for example, the nearest working day to the 27th of each month, means that when the set date falls on a weekend or, worse still, a bank holiday, the UC assessment period will not coincide and therefore the UC computer sees them as having two paydays in one month and none in the next. The two paydays month renders them outside the qualification for benefit, so it simply stops, leaving them with nothing for the next month and having to re-register for UC several times a year. Something similar happens with weekly paid workers in a five-week month. Then if they are unable to attend for interview or answer the benefits office's calls because they are working they get sanctioned and their benefits reduced or stopped. Thus the way UC is administered actually puts low-paid workers who had previously been budgeting just fine into a position where budgeting is impossible.

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