17th
Feb 2014
A recent survey carried out by a flatshare company states that this year four out five landlords will not accept new tenants that receive housing benefits because of fears over the payment structure being brought in under the Universal Credit rollout.
This mirrors the sharp decline of landlords who rent to claimants as it now stands at only 18 per cent, whereas two years ago it was nearly a third.
The economy is starting to enjoy better times and possibly may be one of the reasons why landlords are renting out to less unemployed people, even so landlords say that even if their prospective tenants are only claiming part of the rent then they will not consider them.
In the survey some landlords have said that they specifically state in their adverts that they do not want anyone on housing benefit.
The Government is doing its best to calm the situation down by saying that Universal Credit will provide better protection as they are going to introduce a review system that looks at who is being paid the allowance upon non-payment by a tenant after just one month, which does not seem to be having the desired intent of re-assuring landlords.
This has all to do with one of the findings from the poll that showed most of the landlords had been caused problems with the introduction of changes to the welfare system in 2008.
From 2008 the local housing allowance stopped being paid direct to landlords and went to the tenants, for a direct payment to occur it had to be requested by the landlord. 88 per cent of landlords are unhappy with this present system.
A staggering 90 per cent of the landlords who are not considering taking on claimants said they had encountered problems with damage to the property and late payments.
Matt Hutchinson, director of the company, said: "The 2008 move to stop landlords receiving rent payments direct – designed to give those on benefits greater responsibility for their finances – has had overwhelmingly negative and lasting repercussions for tenants on housing benefit."
"With rents rising and the welfare budget suffering from continued government cuts, the outlook for tenants reliant on housing benefit is getting bleaker."
The findings were taken from a poll of 1,500 private landlords.
PIMS Related Content
Vetting Benefits, DSS. LHA Tenants
Many Landlords make a conscious decision to let to people on Housing benefits. Whilst the Local Housing Allowance can be attractive the fact remains the changes in the way benefits are calculate from April 2011, are negative for landlords. Further more the introduction of Universal Credit in Oct 2013 will change the way Tenants eligibility for Benefits including LHA allowance is calculated and paid.
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Entitlement rules changed 1st April 2013. A tenant will only be paid per a
bedroom based on the LHA allowance not how many rooms the property has - see
Eligibility for Housing Benefits
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With recipients of housing benefits (LHA) there are many known risks. Landlords should always consider asking for a
guarantor, this is because where a
bad debt exists it is often impossible to recover monies from the tenants. (example low income person owes you £1400 (rent / damage) and you are awarded, by the courts, repayment of £5 a month. How many years will it take to recover the debt and interest) see
Rent Arrears Guarantors
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