The Social Housing crisis and Landlords

by Paul Shamplina

4 years ago

The Social Housing crisis and Landlords

Make Text Bigger
The Social Housing crisis and Landlords

Paul Shamplin of Landlord ActionIn May last year I did a TV programme called The One Show, where they filmed me serving a section 8 notice on a LHA tenants at 7am, they had kept the landlords rent of £4,000.

This piece was about the launch of the trial version of ‘Universal Credit’, which I warned would be not be appealing to landlords. Under the ‘Universal Credit’ scheme, the tenants would be paid their LHA, with other benefits on a twice monthly or monthly basis. This means that many tenants who were unable to manage their money, or were in debt, would ultimately fail to pass on the rent to their landlords.

The ‘Universal Credit’ scheme has been delayed and is now supposed to be launched in 2015. I read recently that £621million so far had been spent on this pilot scheme, trialling with less than 2000 benefit tenants in Greater Manchester. There has also been a debate that the IT system built to manage the scheme, is not working properly and indeed is not fit for purpose.

The Housing Benefit /LHA systems have been constantly changing for landlords in the last few years.

It all started to go wrong in 2008, in my opinion. The previous government decided to issue direct payments of Housing Benefit to tenants instead of landlords, to empower them, so they could take responsibility for their own budgets. This resulted in mass arrears, subsequently causing more evictions and those tenants being made homeless. I should stress however that there are many benefit tenants that can manage their finances. Statistically an LHA tenant will look after a property better and stay longer, which landlords like.

Then in 2011 this government introduced the capping of housing benefit, which made sense, because we have come across cases, of some landlords before the cap coming in, making over £4k a month on a 3 or 4 bedroom houses in some London boroughs. This of course resulted in landlords serving section 21 notices to end tenancies, as the cap became too low in some cases. Frustrated landlords evicted the LHA tenant and rented out to private tenants.This did not present an immediate problem, as rents were rising and it became a landlords market, governed by supply and demand, especially in London.

We have heard of situations recently of families being moved from London to Stoke On Trent and this can be upsetting and unsettling for those concerned. This will happen more and more, because currently we have council waiting lists running from 10-20 years and not enough properties being constructed. It is currently estimated that we need 200,000 extra homes a year to be built, which has never been achieved. The argument constantly heard is that tenants should only live in a place that they can afford.

There is also an alarming temporary housing crisis, many councils are struggling to find people temporary accommodation. We have heard of some desperate families ending up in Premier Inn Hotels. By law someone is only supposed to be put in temporary housing accommodation for up to 6 weeks.

On top of all of this we now have the ‘Bedroom Tax’. When an extra room at a property is not used, it is taxed and families are having their benefit cut, resulting also in an all-time high in the use of food banks. The government has set up a fund called Discretionary Housing Payments (DHP) to help councils deal with hardship cases, and many councils have turned down three quarters of the people asking for help. As an example Leeds City Council spent 105 % of its budget, more than £2m, by 12th February and still had to turn 2,200 people away. This equates to almost 40% that applied for help under DHP.

I outline my main fears below-

We know what’s going on at the sharp end of things, as we act and speak for landlords on a daily basis. More and more of them are evicting LHA tenants and are stating that they plan on exiting the LHA market entirely, the reasons are as follows;

‘The tenants housing benefit has been capped and I’m not getting the rent I should be getting.’

‘The tenant has been told to stay in the property by the council, so they have to obtain a possession order, so they can be re-housed.’

‘The tenants benefit has been withdrawn.’

‘The tenants have kept the housing benefit and not passed it on.’

‘I can get more rent on the open market, not renting to an LHA tenant.’

Lastly the biggest issue I have with LHA’ Universal Credit’ is this. Cutting benefits may or may not get people back into work but more likely it is going to have an opposite effect. More people will be evicted, because of cuts in benefit and landlords not wanting to rent to LHA tenants, because of the fear they won’t get their rent. If the landlord has the security that the LHA will be paid direct to them, then that’s a good start. I’m sure the councils would welcome it, not draining their resources and putting extra pressure on already overstreached arrears departments and having access to more landlord’s properties. Landlords will also opt to stay in the sector rather than leaving and renting exclusively to private tenants, where demand is very strong and shows no signs of slowing down.

Comments

Neil Patterson

4 years ago

This highlights just how important it is for Government both Local and Central to work with Landlords.

Zoe C

4 years ago

We also have this problem, recently we took part in a scheme through the Council to let some of our properties (which fall into the benefits cap level) to cases that had been vetted through the local Lettings Partnership. We took on 4 tenants, 3 single males and a young couple with a baby.

The three males have been no problem and we would have been good advocates for the scheme to other Private Landlords. Unfortunately the couple are another matter. The Council checked the flat over before granting them access to it. They moved in, trouble followed almost immediately with the couples relationship. Social services are involved as there is a baby too. Then doors were punched, the top up DHP amount wasn't paid, don't forget all rent is in arrears and the deposit is bonded so we have no actual real money for the damage. Finally we served notice on them for the end of the 6 months, after terrorising other tenants of ours and we await their exit.
We have now been contacted by another department in the Council who are issuing us with formal proceedings as they say we are not attending to repairs. Of course the girl has lied through her teeth and we were given no right of reply, just ordered to do works that didn't appear necessary when they moved in!
We now dread the usual route of bailiffs costing us hundreds of pounds to get her out as the Council won't rehouse her until she is being made homeless.

Funnily enough we have left the scheme now and made it very clear that the Council have not helped themselves or us. We own 130 rental properties in our area, they will never be available again to benefits, privately or through the Council.

It's a shame in the wake of a housing crisis the very people that need help will not get it and we will not be a good advert to any other private landlord that is thinking about doing it.

Adrian Jones

4 years ago

Oddly enough I received the B2L Spring magazine this morning. Apparently the Universal Credit scheme has already been rolled out in Ashton under Lyne, Wigan, Warrington, Oldham, Rugby, Hammersmith and Inverness. Bath, Shotton and Harrogate due to follow very shortly and the remainder of the country by 2017.

I have written to my Council (Bath) regarding one of my tenants who is nearly £2,000 in arrears asking whether I can continue to receive the rent direct because he has already demonstrated his inability/unwillingness to deal with his finances.

I fear I know the answer but will let you know the outcome.

Mary Latham

4 years ago

Direct payment alone is not the answer.

Under the benefit caps of Welfare Reform many tenants are having the housing element of their benefits reduced to bring them under the capped rates. The benefit cannot not be taken away but the payment may be reduced to as little as 50p. Those who have this level of payment may also have reductions of other benefits and their overall income may well have been reduced by a large amount. Which landlord wants direct payment of 50p? Who wants to chase tenants for the balance when they have had their total benefits reduced?

We should be fighting to make Government recognise that a person who is homeless will remain jobless too and that it is totally inappropriate to put their Housing Benefit payment at the top of the list of benefit reductions when they reach the caps. A home is the most fundamental of all human needs and it should be protected from reductions in benefits AND the ambition to make people on benefit financially responsible - they need to learn those skills before the safety net is taken away and direct payment of the full LHA amount should be paid directly to protect them from their lack of skills no matter who the landlord is.

Paul

I'm assuming the tenants did not have kids and therefore you were not sued for serving a notice at 7 a.m. ?

Paul Shamplina

4 years ago

Reply to the comment left by "Industry Observer " at "23/04/2014 - 13:59":

You are able to serve notices at 7am in the morning, best time to try and hand serve, especially we they are being evasive to a landlord and not paying £4k arrears.

Paul

Not so sure that early is that acceptable to the Courts, but you must know best. I understood best time to serve was between 7pm and 8pm at night as 75% of the nation is watching Emmerdale, Coronation Street or Eastenders by then.

Out of curiosity what is the lagal authority that says 0700 in the morning is OK to serve?

£4000 arrears - was this the case with the flash cars parked outside?

DC

4 years ago

“….currently we have council waiting lists running from 10-20 years and not enough properties being constructed. It is currently estimated that we need 200,000 extra homes a year to be built, which has never been achieved.”

Unfortunately, when the forthcoming (26th April) Mortgage Market Review on residential lending criteria takes hold in a few months’ time thousands of people across the country will start to find that they can’t obtain mortgages needed for first or next-time buys so the market will stagnate and the building of new homes will come to a grinding halt as it did in 2008.

This situation will also fuel a massive rise in tenants seeking rental properties within the private sector so LHA tenants will find themselves even further down the pecking order with Council waiting lists growing ever longer.

Glenn Ackroyd

4 years ago

I've got a tenant in Halifax with kids. She gets over £25k a year in benefits, so her benefits are now capped and my housing benefit has been slashed. So as Mary Latham states, direct payment is not always the answer. She is now being evicted - because out of the £25k tax free, and free council tax/prescriptions etc, she 'has no money'.

Glenn Ackroyd

4 years ago

"Statistically an LHA tenant will look after a property better and stay longer, which landlords like."

Hi Paul - what source does this information come from. I know from my own experience that LHA tenants stay longer due to social immobility issues, but they don't look after their houses as well as private tenants. That's the trade off in my experience.

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Council tenant received 200 hour work order for subletting