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Details of the Government’s new procedures for the payment of universal credit have been released – and they confirm that the landlord’s right to insist on direct rent payments if a tenant is in arrears will be scrapped.

Instead, payments will be made directly to tenants and it will be up to them to pay their rents or not. The proposals will mean the end of direct payment to landlords for rent as we have known it, and the new procedures will apply across the board to local authority tenants, housing association tenants and tenants in the private rented sector.

The RLA has serious concerns about the proposals:

1. No back stop provision under which a landlord can demand payment direct.
2. Lack of clarity/much greater individual discretion in operating these rules because “guidance” replaces regulations.
3. No means of redress for landlords if things go wrong/no rights of appeal.
4. No proposal that the guidance should reflect the landlords interests to make sure that rent is paid and that a roof is kept over the head of the claimant.
5. The whole concept of trying to improve tenant’s responsibility at the cost of much greater risk to landlords with strong likelihood of significantly higher arrears.
6. Much less likelihood of landlords being willing to take on benefit claimants. This could even translate into less likelihood of a willingness to take on claimants who are in work especially part time work because the same rules will apply to them.
7. No provision for first payment of benefit direct to the landlord.
8. We have argued with DWP that there should be a right for landlords to be paid direct payments once there are six weeks arrears and also that the whole system of vulnerability should be assessed according to the tenant’s interest of keeping a roof over their head and the landlord’s interest to receive the money, as well as the public interest of making sure that the benefit is used for its intended purpose.

Richard Jones, the RLA’s policy director, said, “We strongly believe that the Government’s whole approach is flawed and although the objective of helping tenants manage their financial affairs is in isolation a laudable one, the Government has wholly failed to appreciate the consequences of this. There will be a much higher level of arrears, an unwillingness of landlords to house benefit claimants (at a time when there is huge pressure on social housing), increased unwillingness by banks to lend for this kind of property (or increased interest rate to reflect the risk), much higher levels of evictions and much greater homelessness.”

The RLA has produced a briefing note for landlords, and this can be downloaded by clicking here.

What can I do?

Further details will follow about how you can assist the RLA in opposing these proposals.#

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In an interview with the Mail on Sunday, Prime Minister David Cameron suggested cutting housing benefit for people under the age of 25 in an attempt to claw back Millions of pounds worth of Government money

Housing benefit is paid to adults on a low income, to help them pay their rent, either to the local council, a private landlord or to a hostel.

It is currently paid to around 380,000 under-25s and scrapping their entitlement would save the government around £2 Billion (GBP) a year.

The Prime Minister suggested that the current housing benefit system is sending out “strange signals” that people are “better off not working, or working less”. It encourages people not to work and have children, but we should help people to work and have children”.

The proposed reforms to the welfare system could be presented as an effort to reduce a feeling of antipathy towards people on benefits that may exist among the general public.

Mr Cameron said that current benefits system has “led to huge resentment amongst those who pay into the system, because they feel that what they are having to work hard for, others are getting without having to put in the effort.”

He also commented that cutting housing benefit for younger people would “stop the state dragging young people into dependency”.

Downing Street said that Mr Cameron wanted to encourage a debate about welfare.

The Prime Minister is also considering proposals to set benefits at a regional level, rather than a national level, in order to reflect wide regional variations in pay.

Political analysts have suggested that Mr Cameron’s comments are part of an effort to reconnect with Conservative backbenchers who believe the party’s values are being watered down under the coalition.

Housing charity Shelter has warned that cutting housing benefit for young people could lead to an increase in homelessness.

The charity’s chief executive Campbell Robb said: “To take away housing benefit from hundreds of thousands of young people – particularly in the current economic environment where young people in particular are finding it very difficult to find jobs – would have a devastating impact on many people’s lives. I think we would see many more people ending up homeless as a result of this kind of very significant change.”

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Why Does Housing Benefit Cost Taxpayers £22 Billion (GBP) A Year?

The latest figures from the Department for Work and Pensions, (DWP), show there are close to 5,000 families still claiming more than the £400 Housing Benefit cap.

According to a report in the Daily Mail

  • At least 100 families are living in luxury homes and raking in enough housing benefits to fund a £1 Million mortgage each
  • Of the 100 families, 60 have their rent paid by the state to the value of £5,000 a month, according to the Department for Work and Pensions
  • More than 30 of those families are given a staggering £1,500 a week (£6,000 a month) to live on and at least 60 families receive more than three times the national average wage, getting £5,000 a month
  • Unemployed living in luxury homes in upmarket parts of London such as Kensington, Chelsea and Westminster
  • Poor families should not be allowed to live ‘swanky’ lifestyles in postcodes beyond their means, says campaigners
  • Calls for the Government’s £400 per week cap to be properly enforced

Although almost four out of every five people on housing benefit pick up less than £100 each week.

At a time when millions of people are struggling to get on the housing ladder, the handouts would easily cover the monthly payments on a £1Million (GBP) mortgage.

Government ministers last year announced a sweeping range of welfare reforms that included housing benefit, which costs the taxpayer £22 Billion (GBP) every year, should be capped at £400 per week.

The figures have been criticised by campaigners and raised concerns that the Government’s plan to cap housing benefit is not being enforced.

Public opinion has been riled by the cases of immigrants and asylum seekers who have been allowed to live in lavish flats at the expense of taxpayers.

The Government handouts have allowed families to live in upmarket parts of London such as Kensington, Chelsea and Westminster alongside wealthy neighbours such as Roman Abramovich and George Michael.

WHERE HOUSING BENEFIT CASH GOES EVERY YEAR 

  • NORTH  EAST………………………….. £923.8m
  • NORTH WEST……………………….. £2,371.5m
  • YORKSHIRE…………………………….. £1,497m
  • EAST MIDLANDS………………….. £1,112.6m
  • WEST MIDLANDS…………………. £1,736.6m
  • EAST…………………………………….. £1,632.6m
  • LONDON………………………………. £5,539.0m
  • SOUTH EAST………………………… £2,536.9m
  • SOUTH WEST……………………….. £1,525.9m
  • WALES…………………………………….  £892.9m
  • SCOTLAND ………………………….. £1,660.6m

TOTAL  £21,429.5m

 

The figures will raise calls for the Government’s benefit reforms to be bulldozed through the Commons – despite pleading from Liberal Democrats.

The data, made public under the Freedom of Information Act, show the areas of the UK that pay out the most in housing benefit are

  1. Birmingham – £469 Million per year
  2. Glasgow       £337 Million per year
  3. Brent            £306 Million per year
  4. Westminster £281 Million per year
  5. Hackney       £267 Million per year
  6. Newham       £264 Million per year
  7. Enfield          £258 Million per year
  8. Haringey       £254 Million per year
  9. Liverpool      £254 Million per year
  10. 10.  Manchester £248 Million per year

The DWP says the new rules which have been put in place mean that those families currently getting more than £400-per-week will be gradually taken out of the system and moved into cheaper accommodation.

A DWP spokesman added: ‘These figures underline exactly why our Housing Benefit reforms are so necessary’.

Emma Boon of the TaxPayers’ Alliance said: “This is further evidence that it is right to cap benefits. It is unfair to ask taxpayers to pay for swanky central London homes for others when they can’t afford to live in those postcodes themselves. Many middle or low income families have to decide if they can afford to house their family in town, or if they have to move out to somewhere more affordable. It is not unreasonable to ask those on benefits to make the same choice.”

 Read the Full Daily Mail article here

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Despite the exorbitant claims about lower LHA rents and the acceptance of them by private rented sector, (PRS), landlords made by the coalition government Prime Minister David Cameron in Parliament on January 11th. Only a handful of landlords with tenants on Local Housing Allowance are actually accepting lower rents in exchange for getting rent paid to them directly.

The claim by the Prime Minister David Cameron that private rents are falling as a result of welfare reforms was wrong!

Mr Cameron had claimed in Parliament on January 11th 2012 that: “rent levels have come down, so we have stopped ripping off the taxpayer”. Apparently he was quoting rental data from LSL Property Services, which had only been quoting falling private sector rents.

The data published by LSL Property Services does not take into account LHA rents.

In an attempt to get landlords to lower rents, councils have temporary powers to pay landlords, rather than tenants, the LHA in exchange for lowered rents.

A later statement from 10 Downing St said: “Private landlords were reducing rents – lessening the impact of benefit cuts – in return for local housing allowance being paid directly to them.

The prime minister made his wildly inaccurate claim in the middle of the Welfare Reform Bill’s rough ride through the House of Lords at a time when his government was desperately seeking to convince peers that the package of reforms would not increase homelessness as tenants would be left struggling to meet their rents under the new benefit caps.

Mr Cameron’s claims that private rents are falling as a result of the governments welfare reforms were difficult to swallow for a number of property professionals, prompting one magazine to take action.

The same data was quoted again on 30th January 2012 by Housing minister Grant Shapps, who seized on the same survey by estate agency LSL Property Services, citing it as the evidence Mr Cameron had used to support his claims.

The survey did indeed show rents fell by 0.8% in December – the second successive monthly fall.

However, if the data is examined correctly, the figures reveal the seasonal drop in private sector rents before Christmas was actually less than the 2.3% drop in December 2010 and rents overall had actually risen 4% year-on-year.

The magazine Inside Housing, used the Freedom of Information Act to request information on LHA rents from the Department of Work and Pensions (DWP), and every local authority in England following Mr Cameron’s claim in the House of Commons.

204 local authorities responded, with only 36 reporting any rent reductions in return for direct payment of LHA. Of the 36, 12 reported a combined total of 65 landlords cutting rents, an average of fewer than six landlords in each area.

The DWP says it has ‘no data records’ of how many landlords have reduced rents, but it has collected ‘anecdotal evidence’ from around 80 councils.

It states: ‘The majority have reported that they have used the new safeguard to help claimants negotiate down rents and all plan to use it during 2012 as transitional (payment) protection runs out.

The Inside Housing survey suggests that most PRS landlords are not even remotely tempted to accept lower rental payments for their properties, either directly from local authorities or not.

The National Landlords Association (NLA) and the Residential Landlords Association (RLA) have each disputed the claim rents are falling and believe landlords are more likely to reduce the number of tenancies let to benefit recipients, warning that landlords would rather re-let their properties at the full market price to working tenants, and are able to do so in the current climate of high rental demand.

Labour’s shadow housing minister, Jack Dromey, has already written to number 10 about the issue but received no response and will raise the matter in parliament demanding that Mr Cameron corrects his statement or justifies it.

Mr Dromey said: “Now we know the truth. The nationwide Inside Housing story exposes the reality of rising rents in most areas of the country and explodes the myth that rents are falling”.

 

 

The clock is ticking

Time is Running Out For LHA Landlords

1st January 2012 will see further changes to Local Housing Allowance (LHA) under the Government’s welfare reform.

 The age limit for shared accommodation room rate is set to rise from 25 to 35.

 This means that anyone under 35 and living by themselves or renting a room will be restricted to the shared room accommodation rate.

 This new figure is obviously well below the current market rent for 1 bedroom properties in most areas, as this will now be calculated on the 30th percentile of the rental cost for 1 bedroom properties in each area.

 This could mean disaster for landlords in the Private Rented Sector (PRS) as tenants in receipt of benefits will soon fall into arrears as their housing portion of their benefit payments (Universal Credit) are reduced by the Government.

 With increasing unemployment due to the state of the UK & World economies, more and more people are finding themselves having to make a claim for state benefits including LHA.

 2012 may well see an increase in evictions, homelessness and maybe even a drop in the average property rental price, as landlords could be forced to lower their rents to accommodate tenants who are only entitled to the lower threshold of housing allowance.

 This scenario has been cited by landlords who keen to avoid benefit tenants and now are only seeking tenants in employment. The private rented sector could end up the exclusive territory of the employed in a few years time and landlords are urged to make thorough reference checks when accepting new tenants.

Landlords who wish to learn more about successful LHA renting and how to deal with local authorities to ensure direct payment, should consider buying “The Essential LHA Manual For Landlords” by The LHA Expert – John Paul.

The ebook costs £47 and is packed full of the exact processes and systems The LHA Expert uses to get paid directly by Local Authorities on 97.9% of the 500+ properties he has let out to LHA Tenants, the contents include:

  • Why you should bother with LHA, and how embracing the opportunity can take you from “Arrears Hell to Cash-flow Heaven”
  • Which properties to target for maximum profit
  • How to make sure you get the full amount of rent available
  • Who to steer clear of to avoid problems
  • Some little known “secrets” to using the LHA rules to your advantage
  • How to switch Tenants on the old system onto LHA to increase your income
  • Exactly how to make a claim – so that you actually get paid!
  • How to virtually GUARANTEE you get paid directly by the Local Authority –(this one alone is worth buying the book for!!!)
  • How you can get paid direct after 4 weeks NOT 8 weeks
  • The latest on Overpayments, and how you can make sure they are taken from the Tenant and NOT you

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