View more on these topics

Benefits reform will increase tenant arrears, says Landlord Assist

Changes to the benefits system will increase arrears levels among social tenants and cause landlords to leave the social sector, Landlord Assist has warned.

The organisation says that the new universal credit system, which will pay housing benefit directly to claimants rather than landlords, will mean many landlords do not receive their rent on time or at all.

The universal credit system is due to be implemented in 2013 and aims to simplify benefits by combining all in-work benefits into a single payment, which is paid directly to claimants in order to encourage personal responsibility.

But Landlord Assist claims the system will put landlords at risk of rental arrears and encourage them to move from the social to the private housing sector.

Graham Kinnear, managing director at Landlord Assist, says: “There is enormous evidence which suggests that tenants in receipt of housing benefit do not pass this on to their landlords. With the cost of living increasing it is very easy for tenants to spend benefit money on other things rather than rent.

“We have dealt with cases in the past where landlords have been at risk of having their property repossessed due to tenants retaining the housing benefit and the landlord unable to evict them quickly enough in order that they can gain a rent paying tenant and resume their own mortgage payments.

“If payments under the new system aren’t made directly to landlords then many will be tempted to leave the social housing in favour of the private market where tenants are more likely to have a regular income and good credit record.”

Stephen Parry, commercial director at Landlord Assist, adds that landlords ought to receive payment for the housing they provide and should not be exposed to arrears because tenants have decided to spend their rent elsewhere.

He says: “If the government had any faith in housing benefit tenants paying their rent and bills then they would operate a similar system with council tax benefit, which is unsurprisingly not the case.”

Recommended

CML says UKAR’s customer checks are prudent move

The Council of Mortgage Lenders has defended UK Asset Resolution’s decision to contact borrowers if changes in their financial profile suggest they may be at risk of falling into arrears. UKAR, the holding company for Bradford & Bingley and Northern Rock Asset Management, is contacting borrowers it believes could run into difficulties paying their mortgage […]

Rooftop reaps the benefits of low three-month LIBOR as arrears fall

Low three-month LIBOR is behind a significant decrease in Rooftop Mortgages’ arrears, according to Fitch Ratings. A report from the ratings agency shows that the arrears levels of Mansard Mortgages, a series of non-conforming residential mortgage-backed securities originated by Rooftop, have almost halved since their peak. Fitch says: “The arrears in this series have stabilised […]

Gross lending at Welsh mutual goes up by 17%

Monmouthshire Building Society boosted its gross mortgage lending by 17%, in the year to April 2011. The Welsh society lent £105m, up from £90m for the previous year. It says this has led to a net rise in the value of its mortgage assets of £41m, taking the total to £550m.

thumbnail

What employers should expect over the next five years

A major feature of our articles is looking into the Jelf Employee Benefits crystal ball to predict changes and trends that may influence the short and medium term shape of UK employee benefits.  By flagging such changes early we aim to provide our followers with the tools to make sensible and informed decisions on their benefits offerings.

Newsletter

News and expert analysis straight to your inbox

Sign up
Comments
  • Post a comment
  • Bob Riach Riach IFA 15th September 2011 at 1:58 pm

    Ive know it the other way round several years ago a client rented to 4 unemployed lads and received the rent direct from the local authority

    The local authority then found that two of the lads had been falsely claiming, then they reclaimed the rent back from the landlord not the lads,??