Changes to the way Universal Credit is paid may make landlords more willing to rent to tenants on benefits, a lettings agent has claimed.
Chancellor Philip Hammond announced in his Budget on Wednesday that claimants will be eligible for Universal Credit from the day they apply, rather than after seven days, while housing benefit will continue to be paid for two weeks after a UC claim.
John Paul, managing director of lettings agent the Castledene Group, told EYE: “It goes some way to helping the Universal Credit disaster but it’s still a long way off from being in a format that we would all like.
“The seven-day waiting period, that has been reduced, was always a bit of an unusual and wasteful period but had a huge impact in families.
“It will make landlords and agents slightly more amenable to renting to tenants on Universal Credit, but more importantly the tenants will not go without payment for the previous six weeks.
“One week might not sound like a lot but for many it will seem like a lifetime.
“I don’t think the Government went far enough in making the process easier.”
Meanwhile, it transpired yesterday that these changes will not kick in until next year.
The reduction of the seven-day waiting period won’t start until February and the two-week housing benefit extension won’t happen until April, work and pensions secretary David Gauke told MPs on Thursday.
Gauke also confirmed that tenants who currently have housing benefit paid directly to their landlord can continue under UC.
This move was backed by the Residential Landlords Association, whose vice-chairman Chris Town said: “This is a welcome change and will mean that tenants who choose, can be secure that their rent has been paid and landlords have the confidence to rent out housing to those claiming benefits.
“It is good to know that ministers have clearly listened to the concerns of landlords and tenants.”
Paul Shamplina, founder of campaign group Landlord Action, was less sure about how positive the changes will be.
He said: “Of greater issue is the increasing complexity of the scheme. Staff assessing Universal Credit claims have not been properly trained, meaning mistakes are being made on an all too regular basis, and as the full service rollout expands, more complicated cases will arise, causing even more challenges for Department for Work and Pensions (DWP) staff.
“Some experienced commentators have suggested the changes, whilst welcomed, represent ‘sticking a plaster’ to a fatally flawed system which requires re-engineering rather than tinkering, and have grave doubts concerning DWP’s ability and willingness to alter the direction of travel.
“Until the system has proved itself fit for purpose, landlords will remain cautious about renting to those in receipt of Universal Credit for fear of unsustainable levels of rent arrears.”
Comments (2)
It’s amazing that the government are stiffing landlords with stamp duty, tax changes, legislation, talking about rent caps when house prices are going up but want them to take on the people they can house themselves due to lack of government owned properties! On top of that local councils won’t help with re-housing tenants when a landlord wants their house back so they have to go to court and most cases I have seen personally, not to tarnish everyone with the same brush as I know people who use the housing benefit system, the properties are trashed! You can’t expect to keep taxing some one who is successful to what now is becoming beyond a joke and expect them to help you with a housing issue. I wonder how many MP’s with buy to let investment properties have housing benefits tenants in situ?
Sure, the changes will have some effect, though it’s going to be barely a small dent on the problem. With benefit caps combined with the worst policy of all (S24) then why would landlords take benefit claimants. S24 will mean that many would run at a loss and that isn’t sustainable.
As the restriction on mortgage interest relief continues to bite then landlords will either sell up or put up rents. As there will be fewer properties to rent it will support further rent rises – all to cover the extra tax. Benefit tenants can’t pay the extra costs so will be pushed out of the system and end up in temporary accommodation. The costs to Councils are already rising and will go through the roof. S24 is the most stupid idea that was shown to have the worst possible effects in Ireland (when a MILDER form was tried).
So who are the winners from it? More tax to Central Govt but Local Govt will be unable to cope with the extra pressure. This means more budget spent on emergency accommodation and less on other vital services. Tenants will see rents rise or be homeless. Landlords won’t vote Tory, tenants won’t vote Tory, FTBs won’t vote Tory as they’ll find it harder to save for a deposit. Builders won’t vote Tory as their market has contracted, Maintenance people won’t vote Tory as they see their market shrink too.
I guess the winners are the Labour voters then.