Subletting of Privately Rented Property

LHA & Housing Benefit payments being switched to Universal Credit will be a disaster for PRS

A trade body is warning that the government’s new Universal Credit payments could have a disastrous impact on private lettings with increasing numbers of landlords saying they will refuse to rent to tenants on benefits.

Research carried out by the Residential Landlords Association shows that landlords are frustrated with the new system, which sees benefits paid directly to claimants who are then responsible for paying their own bills including rent.

Landlords have criticised the way the Department for Work and Pensions handles enquiries and say the process for requesting direct payment from government is too long.

One landlord told the RLA: “The Universal Credit system is mysterious, unresponsive and devoid of communication. I have made three applications. I received one payment, but no statement and I have no idea what the payment was for. I have not received any communication in response to the other applications. There are very long delays which are unacceptable as arrears mount and I still have to pay the mortgage with no rent income. This is a disaster and will result in increased homelessness.”

The transfer from Local Housing Allowance to Universal Credit has also been severely criticised by the RLA, which says there are numerous complaints about missing and delayed payments leaving tenants in arrears. This is leading many landlords say they will no longer rent to any benefit claimants.

One landlord told the association: “I will stop renting to people on Universal Credit as I won’t get rent to cover mortgage payments. The system whereby tenants get payment rather than the landlord is shambolic, universally disliked, makes tenants vulnerable to addictions and homelessness and prevents landlords from renting to people in receipt.”

Richard Jones, RLA policy adviser, says the association appreciates some effort has been made by the Department of Work and Pensions, but insists more should be done.

“Universal Credit and associated reforms make it harder to rent to people on low incomes or housing benefit and we have a building body of evidence that the changes are making it harder for people in difficult situations to get their lives back on track. The issue is whether the DWP can deal with the scale of these issues, given that they have only been dealing with the simple cases do far.”

Blog Post from Letting Agent Today

Many landlords within the private rented sector are increasingly abandoning direct lettings to tenants receiving Housing Benefit, opting instead in favour of our long established, popular and successful ‘Guaranteed Rent’ letting model.

This article provides a clear and useful illustration of the financial risks facing landlords who let their properties directly to tenants receiving Housing Benefit/Local Housing Allowance & Universal Credit.

Landlords should seriously consider exploring the option to ‘Let to the Council’ on a reputable and well-established ‘Guaranteed Rent’ scheme, such as ours, where the risk of incurring any rent arrears or rent loss is entirely removed, in contrast to directly letting their properties to tenants in receipt of Housing Benefit/Local Housing Allowance or Universal Credit.

To fully understand how our ‘Guaranteed Rent’ scheme can remove all these financial risks for Landlords with properties in north, east & west London, please call us on 020 8447 1222 or visit our website for further information.

See details of our Guaranteed Rent Scheme here

If you have any comments, please email the author of this article and click on the link above

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