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Former Deputy PM Wants Action Against Rogue Landlords

Former Deputy PM Wants Action Against Rogue Landlords

Former Deputy PM Reckons “Rachmanism” Is Back!

We need to take action against private landlords and protect society’s most vulnerable people” – John Prescott

Former deputy PM, John Prescott has used his weekly column in the Sunday Mirror to hit out at rogue landlords in the UK’s private rented sector (PRS).

Mr Prescott wrote: “We tackled Rachmanism through legislation, housing finance and building more local authority housing. But 50 years later Rachman lives on in a new generation of unscrupulous landlords. More than a million rented homes in the private sector are now substandard. But for years, the taxpayer has subsidised them through housing benefit. Research has revealed that at least 36% of London’s council houses sold off by the Thatcher government are now in the hands of private landlords. Rents are at their highest ever to maximise obscene profits.”

Peter Rachman was a Polish migrant, who earned the poor reputation of being the archetypal slum landlord, because he subdivided houses into flats and rooms, forced paying tenants out of their properties to replace them with migrants from the West Indies, as it was easier to charge the migrants higher rents because they weren’t covered by UK rent protection legislation.

Mr Prescott also commented on mega landlord, Fergus Wilson’s decision to evict tenants on benefits and rent to Eastern Europeans instead, writing: “We pay out £9.3 Billion (GBP) in housing benefit every year. It helped people like Wilson build their property empires. But cuts to these benefits and the introduction of the bedroom tax means they’re looking to maintain their margins. Now, only one in five landlords rents to people on benefits. Cutting benefits has led to landlords kicking out the poorest people in society. We must get tough and follow Newham Council’s lead by licensing all private landlords to stop them kicking out the vulnerable to feather their own nests.”

It appears that the former deputy PM must have had a small lapse in his memory because it was the Labour government that introduced Local Housing Allowance, (LHA) – which replaced housing benefit and slashed the amount of money that tenants in private rented sector properties could claim towards housing costs, paving the way for the current unpopular bedroom tax that is affecting tenants in the social housing sector. The Labour government also introduced the ATOS Work Capability Assessments that have been attributed to the welfare reforms that the UK is also currently seeing.

Owning rental properties and letting them to tenants is a business and rental prices are dictated by local area demand as well as the LHA rates in each region, so it is unfair of the former deputy PM to tar all landlords with the same brush. Yes there are some unscrupulous landlords out there, and there are unscrupulous bankers and businessmen too, but they are not being targeted by former politicians who use the media to their own ends.

Wind your neck in 2 Jags, and stick to commenting on matters that you know about, rather than wading into a debate on which you know very little!

Landlords may avoid LHA tenants in future

Benefit Cuts To Make 40,000 Homeless

PRS Landlords Urged Not To Refuse
Housing Benefit Tenants

Following the decision by UK mega landlord, Fergus Wilson to evict benefit tenants from his rental properties, a campaign group has called on landlords with rental properties in the private rental sector not to discriminate against tenants on benefits.

Dan Wilson Craw, a spokesperson for poverty charity ‘Priced Out’, said such action could make people who need benefits unwilling to claim them due to fear of losing their home, meaning they could fall further into poverty, stating: “This is just one symptom of a wider housing market that is simply not working in the consumer’s interests”. The charity chose to discuss the issue with the Guardian newspaper, after the broadsheet featured the announcement by Fergus Wilson, who owns around 1,000 rental properties in Kent, after he had taken a drastic course of action to evict all tenants claiming benefits and instructed his appointed letting agents not to accept any further applications from prospective tenants who receive housing benefits due to the high number of tenants claiming local housing allowance (LHA) who had fallen into rental arrears. 

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More Tenants Face Eviction Over Bedroom Tax

More Tenants Face Eviction Over Bedroom Tax

Bedroom Tax Blamed For Increasing
Eviction Numbers

The apparent shortage of 1 and 2 bed properties in either the social or private rented sector means that more tenants are facing eviction for non-payment of the Bedroom Tax because there are no suitable properties available for them to move into.

Mark Rogers, Chief Executive of the Circle Housing Group, one of the UK’s largest housing associations managing 65,000 residential properties, has warned of a rise in tenant evictions because of the government’s new under-occupancy penalty, more commonly known as the bedroom tax.

Mr Rogers said “It is inevitable that there will be a long-term increase in the number of people failing to pay their rent as there are simply not enough vacant smaller properties for people affected to move into to avoid the charge. Circle Housing Group are offering tenants financial advice and encouraging those affected to look at a house exchange scheme, which has seen a 26% rise, but an increase in evictions is also to expected. The under-occupation charge is hitting a lot of people very hard, as you would expect. They are losing money and by the very nature of being on benefits, they are on very low incomes. People can’t down-size because there aren’t enough properties for them to move in to. We did a survey and one finding was that if you let every single bedroom that came vacant, and you housed an under-occupier there, it would take eight years to clear the backlog. Our view is that  for the vast majority the transfer system is untenable. We won’t evict someone if we can’t find a solution for them. If they don’t take that solution that we offer, then we will evict, but we see it as our job to make sure we don’t go down that route. If that happens we see it as a failure; it is expensive to the local authority, it is expensive to the person, traumatic for the person, often not good for the community. We see evictions generally as a last resort. From our perspective I think as time goes on they will go up a little but our plan is that by using our solutions we minimise the impact.”

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What Lord Freud Had Say To The RLA

What Lord Freud Had Say To The RLA

Welfare Reform Minister Speaks Out On Universal Credit

Controversial welfare reform minister Lord Freud has spoken exclusively to Residential Property Investor magazine, published by the Residential Landlords Association.

Universal Credit was originally intended to be a fundamental reordering of the UK’s welfare and state benefit system, however when policy guidelines were announced, the reforms dealt private rental sector landlords a cruel blow, as it was decreed that landlords with tenants claiming local housing allowance (LHA) would no longer receive direct payments, even if they believed that the tenant was in an extremely vulnerable position.

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Government Offers Direct Payment Guarantee For Social Landlords

Government Offers Direct Payment Guarantee For Social Landlords

Private Rental Sector Landlords
Expected To Fend For Themselves

PRS landlords were left furious after the Government Welfare Reform minister offered social landlords the opportunity for direct payment of housing benefit under the Universal Credit scheme, but there was no such offer for private landlords.

Government Welfare Minister, Lord Freud has offered landlords a series of small concessions over Universal Credit, with payment of housing benefit to tenants temporarily suspended if rent arrears exceed two months. However, this only applies to social housing landlords, i.e local authorities and housing associations and not private sector landlords.

Lord Freud confirmed that direct payment of housing benefit to tenants who are at least two months’ behind with their rent, would be suspended, with the total amount of rent outstanding paid back to social landlords within six to nine months.

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New Report Backs Welfare Reforms

New Report Backs Welfare Reforms

Research from an independent consortium led by the Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University covering the impact of recent Housing Benefit reform in the private rented sector was published on Monday 13th May.

The report examined the attitudes of tenant claimants and private rented sector buy-to-let landlords in 19 areas across the UK, following the Housing Benefit and Welfare Reforms that were ordered by the coalition Government in April 2011.

Lord Freud, minister for welfare reform said:”Reform of Housing Benefit in the private rented sector was absolutely necessary to control a system that saw spending double over a decade to more than £20 Billion (GBP) a year. However, it is also necessary to monitor and follow the reforms to help us build and learn for the future”.

Ian Cole, Professor of Housing Studies at the Centre for Regional Economic and Social Research (CRESR), said:”This report provides findings from in-depth interviews undertaken with tenant claimants, landlords and housing advisors in early stages of the implementation of the reforms.

The CRESR also conducted separate analysis of all UK Housing Benefit claims to provide an insight to the initial impacts of the welfare reforms across the UK.

The CRESR report finds:

  • Large numbers of tenants claiming benefits have not been forced to move out of rental properties during the study
  • In 120 UK local authority areas, overall reductions to a tenant’s Housing Benefit / Local Housing Allowance (LHA) have been averaged at £5 (GBP) or less
  • The extra £130 Million (GBP) of support from the Department of Work and Pensions (DWP) to local authorities to help tenant claimants with Discretionary Housing Payment (DHP) has assisted tenant claimants well where Housing Benefit / LHA reductions have been greater than the national average.

The consortium is led by Ian Cole, Professor of Housing Studies, from the Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University. Other key team members included Peter Kemp of Oxford Institute of Social Policy, Carl Emmerson of the Institute for Fiscal Studies (IFS) and Ben Marshall from IPSOS-MORI.

The Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University is one of the UK’s leading academic research centres specialising in social and economic regeneration, housing and labour market analysis.

The consortium’s research started in April 2011 and will run until this Autumn (2013) and covers the effects of:

  • Setting Local Housing Allowance (LHA) rates from the median to the 30th percentile of local market rents from April 2011
  • Capping Local Housing Allowance rates by property size from April 2011 to:
    • £250 per week for 1 bed
    • £290 per week for two bed
    • £340 per week for three bed
    • £400 per week for four bed or more
  • The increased Government contribution to the Discretionary Housing Payment (DHP) budget
  • Increased powers of local authorities to make direct payments to landlords to support tenant claimants in order to retain and secure tenancies in the private rental sector.
  • Allowing an additional bedroom within the size criteria used to assess Housing Benefit claims in the Private Rented Sector where a disabled person, or someone with a long-term health condition, has a proven need for overnight care and it is provided by a non-resident carer who requires a bedroom.

The full research ‘Monitoring the impact of changes to the Local Housing Allowance system of Housing Benefit: Interim report’ is available here: Monitoring the impact of changes to the Local Housing Allowance system of Housing Benefit: Interim report

The Scottish Government along with the Department of Communities and Local Government (CLG) and Welsh Assembly Government are working in close partnership with the DWP and each contributing to the costs of the review.

Further CRESR reports are expected to be published in early 2014.

Direct Payment Of Universal Credit Can Be Made To Landlords with Tenants in Arrears

Direct Payment Of Universal Credit Can Be Made To Landlords with Tenants in Arrears

The Government’s change of policy will now allow automatic direct payments of housing benefit to landlords providing the tenant is more than 8 weeks in arrears.

The government rethink has been welcomed by the Residential Landlords’ Association (RLA) and all UK landlords who house tenants in receipt of housing benefit.

Yesterday was the day the Government’s first flagship universal credit pilot scheme went live in Ashton-under-Lyne, Greater Manchester, and a circular to all housing benefit staff revealed that automatic direct payments to landlords will now be allowed in the pathfinder areas.

The policy change was tucked away on the last page of an obscure circular published by the Department of Works and Pensions (DWP) yesterday. Universal credit expert and RLA trainer, Bill Irvine, spotted it and immediately informed the RLA.

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Welfare Reforms Could Increase Fraud

Welfare Reforms Could Increase Fraud

The Government’s controversial welfare reforms will leave the benefits system more vulnerable to fraud, according to a group of MPs.

The Government decision to press on with welfare reforms means that Universal credit is set to be implemented nationally from October 2013 and replaces a string of existing benefits such as local housing allowance (LHA), housing benefit (HB) and child tax credits.

Changes to IT system for universal credit could make it harder to distinguish fraudulent claims from those that are genuine, and there are calls for the government to give swift assurance that the introduction of Universal Credit will not cause a rise in benefit fraud,

MPs issued the warning after a report by the Communities and Local Government (CLG) Committee into the extent of the welfare reforms highlighted several concerns about the new Universal Credit scheme.

The first trial of the new system begins on 29 April 2013 in Ashton-Under-Lyne, Greater Manchester.

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The ‘Bedroom Tax’ – Under Occupancy Ruling

Changes will be made to Housing Benefit under the UK Government’s Welfare reforms which will come into effect from 1 April 2013 which will mean tenants claiming benefits will receive less benefit towards the cost of the rent.

If there is one spare bedroom in the rental property then the Housing Benefit will be cut by 14% of the cost of the rent. If there are 2 spare bedrooms then the Housing Benefit will be cut by 25% of the cost of the rent.

The new bedroom tax rules mean that tenants in social housing will see their benefit cut if they have spare rooms. These rules even apply to those not on benefit, they will now face charges of around £13 for one spare room and £22 for 2 rooms.

Under the new government rules, one bedroom is allocated for:

  • A couple.
  • A person who is not a child (aged 16 and over).
  • 2 children of the same sex up to the age of 16.
  • 2 children who are under 10.
  • Any other child, (other than a foster child or child whose main home is elsewhere).
  • A carer (or group of carers) providing overnight care.

What it could mean for your tenants

If your tenants are affected by these changes and their Housing Benefit doesn’t cover the cost of the rent, the tenant is expected and legally obliged to pay their landlord the balance.

These welfare reforms will instantly affect social housing tenants, however, private rental sector (PRS) tenants won’t be affected by this change at the present time, but it will happen.

Use the link to the welfare reform calculator to see how your tenants could be affected – Welfare reform calculator

Preparing your tenants for the changes

As a landlord you may wish for your tenants to consider:

  • Talking to you – Re-negotiate a rent reduction to a level which is more affordable
  • Opening a Credit Union account so that rental payments can be made automatically without the tenant having full access to the whole proportion of their benefit payments.
  • Get a job to replace their benefit income.

Housing Benefit will be paid direct to people of working age through Universal Credit. This means that they will have to make arrangements to pay the full rent on time every month directly to their landlord.

This will start in October 2013 for all new claims, with existing claimants being moved onto ‘Universal Credit’ from April 2014.

Universal Credit is a new means-test benefit for working age people. It will be a monthly payment paid into a household bank account that will be generally phased in from October 2013, however this will be trialed by certain local authorities including the City of Salford from April 1st 2013. It will first be introduced for new claimants and for people whose circumstances have changed resulting in a change to their benefits.

It will replace lots of benefits that your tenants may currently receive, including: Housing Benefit, Local Housing Allowance, Working Tax Credit, Child Tax Credit, Income Support, Income based Jobseeker’s Allowance and Income-related Employment and Support Allowance.

How It Will Affect Your Tenants

When the changes affect your tenants:

  • Tenants may receive less benefits resulting in a shortfall in income leading to financial struggles.
  • Tenants will be paid benefits on a monthly basis, direct to their bank account.
  • Universal Credit payments will include the Housing Benefit payment which will be paid directly to them even if they are still in rent arrears or are considered vulnerable
  • There may be a risk of tenant rent default and this needs to be watched out for and action should be taken  to recover the rent immediately.

The latest data published by the Association of Residential Letting Agents (ARLA) has revealed another upward trend in landlord investment and property portfolio building, despite the poor availability of adequate Buy-To-Let mortgages.

The number of UK PRS rental properties owned by landlords increased from seven at the beginning of 2012 to 8 in the final quarter of 2012, with on average, at least 1 of these properties being a HMO.

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