There has been much discussion of late into how the introduction of a Universal Credit will affect tenants currently in receipt of Housing Benefit, and more importantly, how it will affect Landlords who let properties to Housing Benefit tenants. Many experts fear that the planned changes to the current system of benefits payments will prove disastrous. Unfortunately a pilot report published by the Department for Work and Pensions appears to back this up.
The DWP conducted a research study in several areas around the UK. It concluded that a number of serious challenges would arise for tenants and landlords as a result of changes made to the existing Housing Benefits payment system.
- Benefits are currently paid weekly or fortnightly, so changing this to a monthly payment system is likely to leave many tenants struggling to manage their finances.
- Most of the tenants interviewed felt certain that they would run out of cash by the end of the month, which makes the threat of rent arrears a very real problem for landlords operating in this sector (most tenants on benefits have no savings to pay for unexpected bills and over 1/3 of those questioned were worried about the changes to the benefits system).
- A large number of tenants on Housing Benefits live in a cash economy and some do not have a bank account—Universal Credits will be paid electronically, which could be a problem.
Are you a concerned landlord in the social housing sector? If so, you are not alone—the RLA found that 92% of landlords were reconsidering letting their properties to benefits tenants.
