Ministers are to press ahead with their plans to pay benefit tenants their rent money and trust them to hand it over to their landlords
This is despite the fact that a social landlord taking part in a pilot has said that, three months into the test, it is already losing money as tenants fail to pass the money on.
The pilot is running six projects to test the direct payment of Universal Credit – due to kick in next year – to tenants in social housing.
Private landlords have been calling for some time for tenants to be given the choice as to whether they receive the rental element or whether it should be paid to their landlords. Housing charities have also made the same call, saying that tenants themselves would prefer it if their landlords received the money.
In the private rented sector, landlords have had to become used to Local Housing Allowance being paid direct to their tenants. Bodies such as the Residential Landlords Association and National Landlords Association have protested that the upshot is that tenants do not pay their landlords, preferring to spend the money on something else rather than pass it on as rent.
Both the RLA and NLA claim that a number of private landlords have given up accepting benefit tenants as a direct result, or plan to do so.
Ministers have so far dug their heels in, saying that tenants must learn to handle their own finances.
Social landlords still receive rent money direct, but this is due to change next year with the Universal Credit.
Now Wakefield District Housing, which is running one of the six pilots, has said that the policy will cost it £8m a year in bad debts, and that it would have to spend £3.5m a year just on rent collection.
Kevin Dodd, chief executive of WDH, warned the reforms would mean social landlords would struggle to continue to deliver services of social benefit, such as helping people into work.
He calculated WDH’s total social benefit to the community since 2005 to be worth £1.4bn.
Dodd said: “We are into the third month of our pilot and people are now stopping to pay [their rent] at all. They’re spending the money on something else.”
But Brendan Sarsfield, chief executive of Family Mosaic, which is running the London pilot, said rent arrears stood at 5%, lower than he had expected at this stage of the pilot.
He said: “It is too early to say whether direct payments will be a success or not a success.”
Comments
@HSBC'er If you were able to understand the system which you have adequately shown you do not I suggest that you read my post again. I reproduce for you the relevant part and if you look you will see its the first paragraph..............on 11 December I wrote.................
'If the money is paid to the landlord and then the claimant's circumstances change which reduces the benefit paid and it takes some months for the error to be discovered because tenant would have to fund the shortfall and they keep quiet, the landlord will then have to pay back the excess paid to them through claw back.'
So you see even if it gets paid to landlords any overpayments they go to collect from the landlord and funnily enough don’t go to the tenant probably because they know they haven’t got a snowballs chance in hell of getting it. They won’t stop the benefit because they will then have to re-house a bad tenant who they know can not afford it.
I will not deal with state supported riff raff and anyone who does deserves all they get. No surprise landlords are saying what they are but I bet they have not done this before and are now getting fingers burnt.
What's all this talk of DSS tenants?
The Department of Social Security ceased dealing with housing matters decades ago. It have been run for many years by local councils as agents for the Department for Work and Pensions and was called Housing Benefit, and a few years ago it changed again with the emphasis on direct payments and re-named Local Housing Allowance.
The first rule in any campaign is be sure who you are dealing with
And they think this is the way to get landlords to open their arms to dss tenants? What a laugh. They clearly havent spoken to a single letting agent. I wouldnt even go looking for a barge pole, let alone one not to touch them with.
Here is an idea how about they pay it direct to the landlord but at a fixed percentage above the any mortgage on the property or fixed amounts per person whichever is lower? We have to reduce the welfare bill somehow,
Come on we are all in this together.
@ crack on
if only it was so simple...
This isn't about tenants learning to manage their own finances, it's about reducing the housing waiting list. This government is stripping back the welfare state and cutting loose all those that have made a career out of living off the state.
In allowing tenants to receive benefit directly, they are deliberately being encouraged to mis-spend it. The result being that they will be evicted and thus, 'Intentionally homeless'. With such a status there is no legal obligation for housing by the state.
What we're seeing is a sideways attempt to shift vast numbers of DSS tenants from the books so the government can balance theirs, with 'clean' hands. Maggie sold off the housing stock and now this lot are directly targeting the tenants.
Maybe its about time this happened because I'm sure this isn't what Sir William Beveridge envisioned....
This WILL NOT WORK tenants will just spend the rent money, they always do. Rent payments always come last THEY WILL SPEND THE RENT AND THE LANDLORD WILL JUST HAVE TO SUFFER !!! Stupid Stupid idea !!!!
It’s rich to hear twisty whinging councils moaning about how they can’t get their rent money in. As landlords we have suffered the ‘that’s tough’ reply from councils over the last couple of years. Why they can’t help and why they won’t pay local housing allowance direct to landlords unless the tenant is eight weeks in arrears or there are ‘’special’ circumstances.
Take some of your own medicine and see how we feel!
or get some sense and pay the landlord direct!!
"....Ministers have so far dug their heels in, saying that tenants must learn to handle their own finances....."
So who pays for this so- called learning process?
Once again, inter alia, the private sector.
Is there not some multi-billionaire who can form a "Common Sense" political party that will give people a choice to poke some sticks at the present useless lot.
If not, it's UKIP for me.
If the money is paid to the landlord and then the claimant's circumstances change which reduces the benefit paid and it takes some months for the error to be discovered because tenant would have to fund the shortfall and they keep quiet, the landlord will then have to pay back the excess paid to them through claw back. The benefits department chases people for fraud yet the landlord is being defrauded and should have the right of redress.
Through no fault of their own the good old landlord trying to help the dregs of society gets clobbered by stupid system. Gets ripped off by low rent set by a government with no idea about real rent values, has 4 weeks in arrears payment with an AST monthly in advance which is instant disparity. And this bunch of beurocratic brainless @*# heads wonder why landlord's have no interest in DSS tenants. Insurance companies make it harder and harder so I say why bother? I have no DSS and will not deal with them it is just not worth it and I don't give a rats about those less fortunate - I am in business to make money not a fool of myself.
While I am on the subject lets get Shelter funding withdrawn on a basis that it is illegal to fund them from the taxpayers pocket allowing them to stop people earning a living which will make them homeless and a bigger burden to Shelter and see how they can function then with no income and rising costs with diminishing funds. (Sounds like being an estate agent after the Banks screwed us all) Just like our Scottish brothers who have had their income stolen by this bunch of brainless fools. They need a taste of their own medicine and see how they like it.
I know there are a lot of people moaning about this, but why not take benefit tenants, like i do, i have one rule, they must have a guarantor, this enables me to get a rent guarantee, if they have not got one, tough, let them sleep on the streets/wherever till there is enough of them that they vote out the idiots who dream up this baloney.
We done once and never again
This will never take off
This is typical of the sort of government blindness that makes people lose confidence in MP's.
Its all very well for ministers to ask that tenants learn to handle their finances but they're gambling with the landlords mortgage in a lot of cases.
Unfortunate timing with Hallowe'en, Bonfire Night and then Xmas to be paid for.
Maybe it will be better first quarter 2013, though Easter is early next year!!
Madness, total madness
Wakefield District Council have only been operating the pilot for three months and they are already experiencing arrears problems but Brendan Sarsfield says it too early to say whether direct payments will be a success or not!
We haven't had Xmas yet either - will be interesting to see the rent arrears in February after the credit card bills have come in.