Problems loom for ‘rent-to-rent’ as DWP demands Covid cash back
People in receipt of Universal Credit renting in properties via ‘rent-to-rent’ arrangements face being asked to repay back-dated housing payments due to a change in DWP policy.
The government suspended full checks after the first lockdown because it could no longer see claimants face-to-face but the department is now revisiting claims it approved during this time and asking for proof of tenancy agreements.
Housing charity Safer Renting fears renters in this ‘shadow’ part of the UK’s private renting sector will be hit hardest, where rogue landlords refuse to provide agreements or even confirm knowledge of their tenants’ existence.
According to i News, Tina Newman, 40, from Essex, has been told she must repay £5,372 of the housing element of her Universal Credit despite being able to provide bank statements showing that she had been paying rent to another tenant.
At the time of moving into the house-share with seven other people Tina didn’t realise it was an unlicensed HMO and says she was not asked to provide a tenancy agreement by the DWP last March.
While it would accept a written letter from her landlord as proof, he has refused to provide one and is currently denying all knowledge of Tina living at the property. He also denies operating an illegal HMO.
Safer Renting says it has seen a 100% increase in rent-to-rent arrangements from March 2019-2020 to March 2020-2021 and is concerned about how many renters may be unprotected and asked to repay benefits by the DWP.
It argues that the DWP’s policy of asking for a tenancy agreement has no legal basis under Section 54 of the Law of Property Act which says you don’t need a written contract to create a tenancy unless it is to be for more than three years.
Director Roz Spencer (pictured) tells LandlordZONE: “DWP don’t seem to be interested in whether the landlord has acted properly, they just want to put the whole responsibility on the tenant.”
A DWP spokesman tells LandlordZONE: “At the onset of the pandemic we rightly suspended certain verification processes as we could no longer see customers face-to-face. However, we made customers aware that we may return to seek this verification in the future.
“Universal Credit claimants are required to provide proof that they are liable for paying rent. This is usually contained within a tenancy agreement, but can also be established through handwritten letters or notes from the landlord, a rent book, or rent receipts or invoices.”