Private Sector Landlords Can Be Trusted

trusted landlord
 

With the roll-out of Universal Credit accelerating from October 2017, the role of ‘trusted landlords’ is now being discussed. The pilot scheme, started in 2013, saw recipients receive one payment incorporating 6 benefits and, as was feared, this led to a huge increase in arrears. 


Rent arrears are a serious situation for private sector landlords, but the position for social landlords, who for the first time were not receiving rental payments direct, could be catastrophic. This summer, research showed that 86 per cent of council tenants receiving Universal Credit were in arrears, despite the ‘trusted landlord’ status enjoyed by some local authorities which allowed direct payment of the rental element being paid to the landlord. 

The Department for Work and Pensions have released a guidebook to help landlords prepare for when Universal Credit becomes the national system for the payment of benefits.  Will this be freely available to private sector landlords? If so, it should be automatically dispatched, to ensure that every private sector landlord receives one – this safeguards the small landlords, who may not be aware of the changes and how to address them.

The ‘trusted landlord’ title could equally be made about some private landlords, who have been established for many years and had long-term tenants, but it seems this has not been considered – up until now.

A Select Committee has been taking evidence on Universal Credit before its’ full roll-out next year. Calls have been made for a more level playing-field between social and private sector landlords, together (finally!) with a trusted landlord model for the private sector.

One of the key issues being discussed is the time it takes for claimants to receive their benefits. There is a 7-day waiting period before the claim can be processed and it then takes 6 or 7 weeks for the payments to come through. This is not a lengthy period for professionals made redundant and healthy savings accounts. But how many of those tenants are there?

For a shop-worker, or someone on a zero-hour’s contract, even the 7 days waiting period creates difficulties. Living on loans from family, friends or the pay-day lender does not lead to an on-going stability in the tenancy and almost guarantees that rent arrears will occur, which appears to be proved by the fact that rent arrears in the private sector rose from 27 per cent in 2016 to 38 per cent so far in 2017. Before Universal Credit, a figure of 25 per cent rent arrears was considered a problem to address. The new system was meant to do that.

The rental element of Universal Credit being paid to the tenant, rather than direct to the landlord, has created worry and concern since it was first introduced in 2007.  Representations are also being made that tenants should have the right to specify that the rent goes direct to the landlord. This is not necessarily because tenants lack the responsibility to pay it themselves. If they had mortgages, they would pay the mortgage on direct debit. Where is the difference with having the rental element paid direct to the trusted landlord?

Universal Credit has a laudable intention, but perhaps it has some way to go to make it 100 per cent fit for purpose. The delays in payment need addressing, more help for private sector landlords, ‘trusted landlords’ also in the private rental sector and perhaps a re-think on when the roll-out takes place may be advisable.

For advice on buy to let issues – Ask Sharon 

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