Landlord Headaches Over Housing Benefit Tenants

The changes introduced in April 2008 meant that Local Housing Allowance could now be paid directly to the tenant.  I have always thought this was a stupid idea.

Previously, tenants and landlords could agree that benefit was paid direct to the landlord. Housing benefit tenants are notorious for not paying rent. Having it paid direct to the landlord meant it avoided the tenant getting into arrears on many occasions.

Many HB tenants are not great at managing finances, in lots of cases its why they came to be on benefits.

The National Landlords Association wants to see the recent changes reversed as soon as possible.Landlords arrears have been rising. Many tenants are ‘ playing the game’. They know their way around the rules and have figured out that they can be in arrears for 2 months before eviction proceedings will even start. In reality they could get away with not paying for the best part of a year or more, assuming the eviction process goes to plan.

The latest research carried out by the NLA shows that total rent arrears across the UK relating to LHA could be as high as £220 million and this is causing ‘major problems’.

Landlords Won’t Rent To HB Tenants

There is a raging debate going on about renting to HB tenants on another forum. Tenants new to HB are finding that landlords  are increasingly reluctant to let to those who receive Housing Benefit. This has a knock on effect for landlords who have to pay the mortgage-by forcing many in to repossession circumstances due to non payment of rent.

‘If ministers are serious about the importance of the contribution the private rented sector makes to the housing mix, then tenants’ right to choose to have their housing benefit paid direct to their landlords must be reinstated immediately,’ said David Salusbury, NLA chairman.

Both tenants and landlords are losing out.

‘The NLA is hearing about more and more landlords who are refusing to let to LHA tenants. We need more affordable housing in the UK, not less – action is needed and it is needed now.’

Employers

Many employers have a policy of ‘last in – first out’ when it comes to redundancies, which causes young people to be most vulnerable.  They are also the largest group of tenants as few earn enough to be able to afford to buy.  Responsible tenants can suffer if they share a flat too, if one person becomes unemployed but doesn’t pay their share of the rent out of their housing benefit the other tenants risk being evicted unless they make good the shortfall and pay the rent in full, or find a new tenant to replace the non payer-leaving them out of pocket.

Competition for properties will probably increase (it already is in our area) this leaves tenants claiming benefits in an even more difficult position.  RICS  says that the exodus of ‘reluctant landlords’ from the letting market is reducing supply and pushing up rents – good news for landlords at last. The unemployed will find  it very difficult to get a landlord who will accept them.