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.”