Alan Ward is Chairman of the Residential Landlords Association and a Conservative Party member.
A quarter of all private sector tenants are in receipt of benefits. With growing concerns around the impact of Universal Credit changes are needed to improve the system.
Tenants should be given greater say over how best the Credit should be paid, landlords need greater confidence about reclaiming rent arrears, and private landlords need the same information on claimants that the social rented sector enjoys.
The principle of Universal Credit is one that the RLA supports. Prior to its introduction, the benefit system was becoming too complex to navigate both for tenants and for landlords.
Ministers have rightly sought to roll out UC slowly, spreading it to a few Job Centres at a time to understand the impact it is having, and welcome changes to support tenants and landlords in the rental market have been made.
This includes the Housing Confident initiative, under which Universal Credit work coaches talk to claimants about their housing arrangements and the support that claimants might need to ensure that can make rent payments on time. The Department of Work and Pensions (DWP) is working constructively with the RLA and others to ensure landlords are familiar with a UC claimant’s journal so that all parties can get a better understanding of the status or a UC claim and when payments are to be made.
Despite these welcome steps, challenges remain. As research by the RLA has found, average rent arrears among UC claimants in the private sector are around 15 per cent higher than those for all tenants in the market. MPs are also reporting constituents raising concerns about rent arrears building up.
Between 2008/09 and 2015/16 the proportion of private sector tenants receiving housing benefit has increased from 19 to 24 per cent. Despite this, private landlords do not enjoy the levels of support afforded to the social rented sector.
The RLA believes that these are challenges that are not insurmountable, and could be addressed without threatening the principles underlining UC.
Firstly, it is welcome that, if reports are to be believed, ministers are considering cutting the waiting time between applying for Universal Credit and then receiving if from six to four weeks. This would more accurately mirror the payment schedules of people in work and would provide more systematic support to prevent rent arrears, rather than ad-hoc fixes using advanced payments. It would also give landlords more confidence to rent to claimants at a time when they are facing extra financial pressures following tax rises.
Secondly, it is crucial to reinforce confidence that where rent arrears build there is a mechanism for reclaiming them easily, especially where a tenant leaves a property. In 2015 Earl Cathcart, the Conservative peer, supported by other peers, tabled an amendment to the Welfare Reform and Work Act calling for such a system.
In his response, the then Minister, Lord Freud, refused to accept it, arguing that private landlords simply had to accept arrears as bad debt. This sentiment did nothing to allay concerns among landlords who are so vital to providing housing to UC claimants.
Thirdly, many social sector landlords are able, under the Government’s Trust Partner scheme, to directly access important information about when a UC claimant begins to receive payments and on what days. Private landlords do not have this information; leaving them in the dark on basic points such as whether or not a tenant is receiving UC in the first place. This makes it difficult for them to work with tenants on the most suitable dates for rents to be paid.
Encouraging landlords to view, with the tenant, their UC journal is a start, but what happens when a tenant doesn’t willingly want to provide the information? We believe that a structure could be put in place to enable good, private landlords to access the information they need to help them plan to support tenants in receipt of UC.
Finally, the RLA continues to believe that tenants are the ones best placed to know what should happen to their money. That is why we, along with many other organisations including Shelter and Crisis, have been calling for tenants to be given the opportunity to choose to have payments made directly to their landlord to cover the rent.
This facility existed under housing benefit but has been denied to UC claimants. The thinking behind it is that this encourages responsible budgeting by tenants. But what could be more responsible for tenants to ask that a payment is made direct to their landlord so that they have certainty of knowing the rent has been paid and they can budget to spend what is left?
Even if the tenant does not choose this, at the very least making the first payment to the landlord would provide them with confidence that tenants are receiving the Credit and have the funds for rent in the future. At the very least, we believe that the period of rent arrears that a UC tenant builds before a landlord has the right to apply for payments to be made directly to them should be cut from 8 to 4 weeks to prevent excessive rent arrears being built.
The message then is clear. Universal Credit is a good idea. Simplifying the system and ensuring claimants are always better off in work than out of it is what we all want. It could gain wider acceptance with a few changes to the way that it is delivered what would make it work better for tenants, landlords, and the Government.