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Letting to housing benefit recipients – good or bad?

This is ‘an old chestnut’, says Frances Burkinshaw. That is not meant to be rude or patronising to those in receipt of benefits – it’s just that it’s been debated for 40 years.

Frances Burkinshaw

Houses on stacks of money image

There is discussion as to whether it might be deemed to be discrimination to refuse an applicant who is in receipt of Housing Benefit; different people have different views on this.

Firstly, we should consider why such applicants would be refused. There are obvious reasons such as the worry of rent arrears should the benefits be stopped.

Agents contract with a landlord to find a tenant who can afford the rent. It isn’t discrimination; it is good business.

Governments have spent years trying to modernise and update the benefits system and now Universal Credit is being rolled out throughout the country. Some areas have had this system for many months; others haven’t yet started. The objective is that there will be one benefit, with all benefits rolled into one. I believe that this might cause problems for Housing Benefit.

REMEMBER CLAWBACK?

As President of ARLA in 1999, I had a meeting with Nick Raynsford, then Labour Housing Minister, accompanied by representatives from the RICS and ISVA, to explain to Mr Raynsford about the problems faced by landlords and agents who let to tenants on Housing Benefit.

Frances Burkinshaw image

Frances Burkinshaw

The main problem was ‘Clawback’ – if there was an overpayment of benefit the Local Authority could claim it back from the person to whom it was paid. In those days a tenant could elect for payments to go directly to the landlord but landlords were wary of Clawback as were agents. I argued strongly that the landlord or agent may have had no idea that the benefit should not have been paid so why should they suffer?

He wasn’t interested. His view was that virtually all landlords were bad! He wanted tenants treated as ‘adults’ who could deal with their finances. He said people in receipt of a wage were not told how to spend each pound and therefore we should not expect those in receipt of ‘Housing Benefit’ to spend it on Housing! He was determined to punish bad landlords – that was all he could think of.

THE WAY IT WORKED THEN… AND NOW

Benefits were paid 4 weekly in arrears; now it is 2 weeks in advance and 2 weeks in arrears. The payments still do not match rent payments which generally are paid monthly in advance. This can make accounting difficult for landlords ensuring that rent does not get into arrears.

Some months later there was a change. Clawback could only then be claimed back from the landlord or agent if it could be shown that they were aware that it should not have been paid – it made a great difference.

Further changes were made and all monies had to paid to the tenant unless it could be proved that the tenant really couldn’t manage their own affairs or the rent was more than 8 weeks in arrears.

Now Universal Credit is having many problems – the answer has still not been found. It can still take many weeks for a claim to be agreed, creating rent arrears from the start of a tenancy.

The question of discrimination is interesting. Once upon a time rented property was ‘poor’ and tenants were often deemed to be ‘second class citizens’ in receipt of benefit and who would not pay their rent. In the 1970s there were signs in agents’ windows and advertisements saying ‘NO DSS’.

BENEFITS AND BUSINESS

Times have changed; the PRS is now an enormously important part of the housing system with excellent property available to everybody. Benefits however, are not there to be ‘a way of life’. They are there to help people in trouble for a period of time, perhaps due to redundancy or relationship breakups. It is sad that they might be unsuccessful if finding a property to rent in their time of need.

Landlords, however, let property as a business and need to ensure that the business succeeds. If rent isn’t paid the business will fail. So it is normal to ask for a personal Guarantor. Without such a guarantee it could be weeks before a benefit claim is restored.

Agents also have a contract with landlords, it is the agent’s duty to find a tenant who can afford the rent, agents often contract to find a working tenant, who can pass references including a good credit score and a tenant who can pay a deposit. If this is the case they would be in breach of contract if they let to a tenant on Housing Benefit. This is not discrimination; it is good business.

It is not agents or landlords who are at fault. The system simply does not work well and needs yet another complete overhaul. Government must stop ‘Agent and Landlord Bashing’ for all the problems with housing.

Frances Burkinshaw is an experienced independent trainer available nationally for in-house or group training. 01892 783961 or 07887 714341 or frances@ivychimneys.co.uk

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