I fully expected housing and the private-rented sector to stay firmly in the media spotlight through 2014, but even I didn’t expect the focus to start so soon and with such intensity.
The news that Kent landlords Fergus and Judith Wilson have decided to send eviction notices to every one of their tenants on welfare and refuse all future applicants who will rely on benefits created waves of media interest and debate. The Wilsons say that in future they will be only letting to working tenants who, they find, default on rent payments less frequently than those claiming benefits.
It’s a tough situation, but hardly a surprise. We’re seeing a clear trend of landlords moving away from renting to tenants on benefits.
Only three years ago, the NLA landlords’ panel survey found 46 per cent of landlords reporting that they let to housing benefit claimants. That proportion has now halved, with the latest survey finding that only one in five (22 per cent) say they let to benefit tenants.
Since the release of the story we have heard both positive and negative opinions in the press and through our social media channels. I have the sense of long-awaited pigeons coming home to roost. The Wilsons’ actions reflect much of what our research and contact with landlords led us to expect would be the result of the Government’s changes to the benefit system.
As the Welfare Reform agenda progressed over the past three years, the NLA has warned that it was based on a false premise – that rents rose with the willingness of housing benefit to pay them – and that the reality was that landlords would see renting to those reliant on benefits as an increasingly risky business. The prospect of universal credit made landlords even more worried for their financial future. Their overriding concern is that in the end, the rent will not get paid.
The plain fact is that benefit levels haven’t kept up with rents, so no wonder that landlords looking more and more to working tenants who don’t tend to fall into arrears that easily. And there are many more working tenants looking to rent because it is still so difficult for first-time buyers to get onto the housing ladder.
The uncertainty and the impact of Universal Credit should certainly be looked at more closely.
Back in August 2012, well before the anticipated rollout of Universal Credit in October 2013, our research showed that 65 per cent of landlords were concerned by the prospect of Universal Credit replacing local housing allowance (LHA).
51 per cent of those landlords asked were unsure if they would accept benefit recipients in the future and 85 per cent thought it was too great of a risk without direct payment to the landlord. What’s more, 59 per cent said that they were confident that there were sufficient alternative tenants locally who were not reliant on benefits.
Being a landlord is a business and there are landlords who specialise in letting in the housing benefit market. Increasingly, they tend to be the more experienced landlords with larger portfolios, who understand how to manage tenancies to ensure stability and minimise the risk of arrears. We know of many landlords who have rented to housing benefit tenants for many years and have never had a problem, so our advice would be to always look at every tenancy and tenant on an individual basis, rather than taking a blanket decision.
It is too soon to tell the full impact of the LHA changes and while the NLA supports the concepts behind welfare reform, the practicalities seem divorced from both the realities of many tenants’ lives and the impact it will have on the ability of landlords to fill the gaps in the UK’s supply of housing created by an inability to access other tenures.
The private rented sector plays a vital role in providing much needed affordable accommodation to tenants on low incomes, including those in receipt of housing support. However, if landlords do not have the confidence that rent will be paid to them many will follow the Wilsons in concluding that it is simply too risky to continue letting to tenants on benefits.
Richard Lambert is Chief Executive Officer of the National Landlords Association.