Tag Archives: Universal Credit

The Social Housing crisis and Landlords Landlord News, Latest Articles

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.


Universal Credit is not a debacle Parliament told by IDS! Landlord News, Latest Articles, NLA - National Landlords Association

Mr Iain Duncan Smith the Work and Pensions Secretary, admitted to Parliament yesterday that the Universal credit system was not yet ready for couples who make a claim.

This was after a storm on Sky News using NLA figures showing that the number of landlords letting to people on benefits has crashed from 46% to just 22% in the last three years.  52% of landlords say they would not consider letting to someone on benefits and 70% of those who do have experienced rent arrears in the past 12 months averaging £3,000 each.

Universal credit has been widely criticised in all the pilot areas it has been rolled out in by landlords. In every area it lead to a significant increase in rent arrears largely because tenants are now responsible for their own household budgets with housing benefits not being paid directly to landlords.

Mr Duncan Smith told Parliament that reforms were on track despite delays and writing off more than £40m worth of software designed for the new Universal Credit with a further £90m of equipment that would be worthless in five years’ time.

MPs on the Commons work and pensions select committee were told that claims by couples had to be handled manually because the computer system could not cope as it was designed for single adults and had not been configured for couples or claimants with children.

Mr Howard Shiplee, the former London Olympics executive who was brought in this year to trouble shoot, told the MPs that problems arose if a single claimant met a new partner and moved in with him or her. He said “As the potential for claimants to change circumstances, for things to change … the more complicated it becomes.

“Therefore the next stage is to work on couples. That will be a complicated issue. Couples come together, they divide, they have children, things happen.”

“This sort of software is not something you get on the back of a cigarette packet. It’s complicated.”

Mr Duncan Smith claimed the scheme’s assets were worth £152m and Universal credit could ultimately boost the economy by up to £38bn over ten years by moving claimants off benefits.

It was confirmed last week that the 2017 target for the full introduction of Universal Credit will be missed with 700,000 claimants facing a longer wait.Universal-Credit


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