Civil servants react to benefit change impact on social landlords

A senior Department for Work and Pensions official has admitted proposed changes to the way benefits are paid could harm social landlords.

Speaking at the Chartered Institute of Housing's South East conference earlier thhis week, Cathy Payne said officials are aware the "financial position of social landlords could be under threat" from plans to pay housing benefit to tenants rather than landlords.

The Welfare Reform Bill, which is currently going through Parliament, contains provisions to allow the housing element of the new universal credit to be paid to landlords. However the DWP has said this will only be used in exceptional circumstances.

Lenders have warned that if the proportion of housing benefit that is paid to tenants increases this could make the social housing sector less attractive to financial backers because its income would be less secure.

Ms Payne, who works in the DWP's housing benefit strategy division, said discussions are at an early stage on how the direct payments issue should apply to social landlords. "No decision has been made on that, it is something we have got to work through".

She also added that housing benefit payments to private rented sector tenants who move onto the universal credit would, in general, continue to be paid in the same way as they are under the current system.

Around 81% of benefit payments made through the Local Housing Allowance currently goes to tenants. However Ms Payne said all 1.5 million local authority tenants and most of the 1.8 million housing association tenants who receive housing benefit have payments made direct to their landlord.

Ms Payne also conceded there is a lack of research to support ministerial claims that private sector landlords will reduce rents once Local Housing Allowance caps are imposed.

"There isn't a lot of evidence", she said. "Some [landlords] are saying they will reduce their rents. It depends on the degree of shortfall, where there is a shortfall of £10 a week you might find landlords are prepared to reduce their rents. Larger shortfalls might be difficult."

Alex Kennedy, Campaigns Manager at Crisis, who was also speaking at the event, said: "It is very hard to find evidence either way, but there is a real concern that landlords will exit the market."