DWP Measures to tackle Rent Arrears

Private landlords have doubted that the DWP understood the tenants who they felt they helped by paying rent to the tenant under Universal Credit.  This seems proved as,  from 26th November, they will deduct 20% of the non-housing related benefit  where tenants fall 8 weeks in rent arrears, with the sum collected being  paid to the landlord to reduce the rent arrears.

A tenant under 25 will lose £50 per month with a couple losing £100 per month; for families with children living them, the sums would be even more.  Considerable reductions which could lead to the horrors of loan sharks, stealing or quitting tenancies.

Empowerment, it seems, works when it comes to paying the rent, but not in re-paying a debt.  In fact, it could be seen as disempowering of those good housing officers and landlords, who previously accepted that anyone can be tempted and fall into arrears, but worked with them to negotiate a payment plan themselves without recourse to penalising them to the extent that a 20% deduction would.

Social landlords have found their rent accounts worsening and their future funding at threat, but even they feel 20% is too much.  The National Housing Federation campaigned on a basis of a 10-20% deduction, conditional on the option that social landlords could ask for lower payments where 20% would lead to hardship, but this was not acceptable to the DWP who went for a 20% deduction.

From 26th November, if a landlord informs the DWP that a tenant is 8 weeks in rent arrears, a 20% deduction will apply.  Will this be the same case for private sector landlords?  Time will tell, but in the spirit of equalising the situation between private and public sector, it should do.  We can look forward to newspapers headlines labelling social landlords as “money-grabbing” and “rogues”, perhaps?

Is this intended as a means of collecting rent arrears or as a dis-incentive to the arrears accruing in the first place?  Private landlords need to be aware of this legislation and make sure tenants know about it too – the sums taken will have a disastrous effect on their finances, stretched to the limit even without deductions.

By Sharon Betton

Do I trust my tenant re? Rent arrears?

A very nice, trusting landlady put a scenario to me.

She was introduced to the tenant by an acquaintance.  He had nowhere to go; had made no provision for taking a private rented property, so had no deposit, no references from a previous landlord nor a Guarantor.  These were all reasons for the landlady to put kindness to one side and allow logic and business sense to come in, but – she was a nice lady.

The tenant moved in, paid his rent for a couple of months then, disaster!  He lost his job, but he was entitled to housing benefit.  Yes, he was – but it didn’t get to the landlady.  8 weeks in rent arrears, she asked housing benefit to pay her direct, which they did – until the tenant started work again.  He paid for another few months with tiny payments off the arrears, but then the payments stopped.  After reminders, he advised he was out of work again.  Back on housing benefit, payments went to him until another 8 weeks arrears had accumulated.  The landlady had to request again that payments be made direct to her.  All continued well – until he gained a third job.  But this time, the payments reduced to a dribble.

In June, the landlady was getting desperate.  There had been no rent for some months, no income to allow her to service her properties properly, something had to be done.  She served him a s.8 notice, but wrote him a courteous letter, pointed out that if the rent was not paid regularly and something done to reduce the outstanding arrears, she would have no alternative but to act on the notice and seek possession through the courts.  She contacted the person who had introduced him to her – he was no longer speaking to him and was not prepared to discuss the matter with him. However, the letter and notice galvanised the tenant into action.  He was prepared to sign an agreement to pay  the arrears.  The landlady was very happy, she didn’t want to have to evict.

It did not last long.  The first payment was made, then nothing.  Texts were responded to with “I’ll pay you by the end of the month” – but no payment was made.  His most recent contacts were “I’m leaving at the end of October”, then “I’m leaving at the end of November”.  She wanted to know, should she believe him? I’ve never met the tenant, but going from his history, my answer was “no – he’s playing you along – evict”.  Eviction is expensive and no landlord can be blamed for trying to avoid it, but there are times when there is no choice.  This tenant is in debt.  He is also trying to stay as long as possible.  Is it likely that he has accumulated a deposit for a new place?  I think not.  Is he likely to find an equally kind landlady a second time?  I sincerely hope not.

When there are substantial rent arrears, don’t make the mistake of holding off eviction because he has told you what you want to hear. Actions speak far louder than words – and the actions where  there are rent arrears need to be payments.

By Sharon Betton

Being fair to tenants!

A recent query on terminating a tenancy on the grounds of rent arrears gave me pause for thought.  No-one can doubt my sympathies with landlords’ who are patient and sympathetic when arrears accrue – perhaps more sympathetic than they should be, accepting excuses far more readily than I would.  The landlord I spoke to seemed to have taken all my advice about being aware of arrears a little too much to heart and was over-anxious about his rent.

The tenant was accepted and had been open that he would require housing benefit; however, he had paid 2 months’ rent in advance when his tenancy started on 1st September.  The rent was paid for September and October and the next rent, due on 1st November, had not been paid.  I do not know what the tenancy agreement said so do not know whether it said the rent was payable 2 months in advance so therefore was already 2 months in rent arrears or whether it was payable monthly, but evicting on a rent arrears ground under the circumstances outlined would be difficult.  Even worse, it plays into the hands of those who feel that landlords are money-grabbing and uncaring.

Of course, landlords should be aware of when rent is due and take steps when arrears start to accrue, but accepting a housing benefit/Universal Credit dependent tenant and not understanding that this will almost inevitably cause delays.  It would also be very difficult to maintain rent payments in advance and jumping on them when the rent payment is a couple of days late does take it to extremes.  By all means, write a short but pleasant letter so they know that you are on top of the situation.  That should prompt the tenant to contact housing benefits/DWP to find out exactly what is happening with the claim.

The situation with this tenant could be worthy of the landlord’s anxiety, but it is really too early to tell.  He could also be the model tenant, who had acted responsibly to get 2 months’ rent in advance at the start of the tenancy.  A little patience could build a really strong landlord and tenant relationship.

By Sharon Betton

Update on Universal Credit

Government data released on 17th September 2014 shows that more than 11,000 households were claiming Universal Credit during August of this year.

This is a considerable increase on July, when 7,460 households were claiming and June, when 6,630 were claiming. As anticipated, the rate at which the programme is rolling out is accelerating.

39 job centres were processing claims for Universal Credit by mid-August and all are now accepting claims from couples, as well as single people. It is anticipated that roll-out to families will follow later this year, though dates for expansion have not been announced, yet.

Between April 2013 and August 2014, 13,260 started to claim Universal Credit; as one of the selling points of Universal Credit was that it would encourage people into work, how successful has this been? In fact, over 2,000 had moved off benefit before 14th August 2014. It is difficult to gauge how successful this is, without looking at comparable figures for a similar period before Universal Credit, it would appear that even in the very early stages, it seems to indicate that for some, at least, it has worked.

A DWP spokesman has said that by the end of 2014, “around one in eight job centres in Britain will be offering Universal Credit” and by the time Universal Credit is fully implemented, eight million people will receive their benefits by Universal Credit.

So far, results are being seen as positive, despite the arrears that social landlords now find they are struggling with.  However, claims so far have been “clean” claims, the single homeless who would not, generally have multiple benefits.  As it implementation progresses, the claims will become more complex.  Be prepared – you may think it can’t happen yet, but you need to be ready for it.  Make sure your tenants have bank accounts, tell them you understand the difficulties when their claims transfer and payment is made monthly in arrears; if your tenants have had difficulties in payment of the rent, make sure you ask them to apply for direct payments to you.  Ignoring it and hoping it won’t happen won’t help; being prepared and ready for it, will.

By Sharon Betton

Housing Factory by Sharon Betton

Procure Plus is a North West consortium with 40 social landlord members. They have hired consultants to look at the feasibility of developing an off-site assembly plant, which it is believed could produce 1000 properties a year for the members and could be up and running by 2016. It would be the first of its’ kind in the social sector and would cost between £2m and £3m to develop.

I am a great fan of pre-fabricated housing, because I saw this at first hand when visiting Japan. Virtually every house there is “new” and my own little house, built in 1936, was considered quite an ancient monument!

Japanese houses are expected to last 25 years, and then start again!  The home-buyer goes to a house “super-store” – a site with examples of every kind of property they build.  The purchaser then chooses the rooms that are needed, the wood finishes, wall decoration, built-in furniture.  Of course, with a 25 year life-span, that means that all the latest innovations are installed at the time of assembly.

Why am I such a fan?  Well, no decorating for a start!  Walls have a vinyl wall covering.  Toilets have warm seats, a built in bidet and blow-dry facility and automatic flush – I would kill for one of those!  No radiators cluttering up walls – heating is via fan heaters at ceiling height.  Built-in cupboards in the lounge but little other furniture – a table and chairs and a small couch;  this was used by the dog, I was told (after I had sat on it!), because others either used the dining chairs or knelt on the floor. Light switches have a small light when they are off, so no scrabbling around for a light-switch in the dark.  Houses have a space on the ground floor which is for storage; in Britain, we would make it into another room, but storage is important in Japan so it is built into the properties.  Bathroom and a toilet are also on the ground floor, with most of the  living accommodation on the upper floors, though in the house I stayed in, there was a room on the ground floor for the grandmother of the family.

We would probably feel the living accommodation was small, with a lounge area with a table and chairs and a small, but very well-planned, kitchen. Another toilet and a washing alcove with a sink were just off the kitchen.  A novelty is the “Special room”, which houses a Shinto shrine and is used only for special occasions.  Upstairs were 3 bedrooms with built in wardrobes.  No bathroom on the top floor!    2 of the bedrooms were quite small, though space maximised by using sliding doors.  Futons Japanese sleep on are not like the European version we see in Ikea – they are thin mattresses which are folded up during the day with no supporting framework.

The one European bed in the house was slept on by the mother – a single bed.  Having slept on both, I preferred the futon.

Most properties had no garage space though bicycles were left at the front.  There was a small garden at the back, but very little used, other than for the dog.  Japanese people prefer to go to the large ornamental parks that seem to abound, picnicking and barbecuing under the cherry blossom.

Properties built in this manner are sensibly planned and give the purchaser exactly what they want; they keep up with innovation and economies of scale are possible.  I am glad that social landlords are considering the advantages of a “housing factory” – it would be nice if an entrepreneur decided to build one for private landlords to access.

A pronouncement from the Lib Dems!

Electioneering is hotting up prior to next years’ general election and the party conferences.  The most recent is the Lib Dems announcement that if returned to power they intend to build 300,000 homes – a year!

This seems ambitious in the extreme and given the amount of money that is being put-in to bring empty properties up to a lettable standard, perhaps unlikely.  It seems whoever is asked to form a Government in 2015, the country will be full of building sites!

We can only hope that some of this comes to fruition, if only for the sake of the jobs created.

An exciting development  is  planned for the 10 local authorities that make-up Greater Manchester to set-up a new organisation, TopCo.  This will negotiate long-term funding schemes with the Government, Europe and agencies, to make up the short-fall between homes currently in construction (4000) and the 9-10,000 which it is believed are required.  Pooling investments between authorities, pension funds and wealth funds could stimulate development.

Chancellor George Osbourne is being urged to raise the level of stamp duty to £500,000 in the Conservative manifesto.

Anne Main, Conservative MP for St. Albans, calls the duty ‘perverse’ which  disproportionately affect London and the South East; Dominic Raab, Conservative MP for Esher and Walton has called for opposition to the Mansion Tax, which will affect anyone with a highly valued property and to overhaul stamp duty.

Many will feel that both these measures would be helpful to home-owners and landlords.  What a pity it is all lumped into  vote-catching.

By Sharon Betton

Sanction problems acknowledged by DWP by Sharon Betton

Finally acknowledging what has been said since the new legislation around jobseekers came into force, the Department of Work and Pensions have been criticised in a report they commissioned, written by former Policy Exchange economist, Matthew Oakley; they have promised they will tackle the issues and put in place some of the recommended 17 improvements.

Sanctions for Jobseekers and Employment and Support Allowance claimants can trigger the stopping of housing benefit.  This is because the claimants have not realised that a sanction is a major change in their financial circumstances and the council should be notified of this.  A new claim can be in-put on the basis of “nil income” so the housing benefit will continue to be paid.  It is also possible that claimants have not realised that there is no automatic notification through the computer system.

The DWP, in responding to the report, have said claimants will be advised that they must keep the authority advised of their situation and that eventually, there will be an IT solution, but that is in the future.  I would advise that you make it part of your new tenant procedures to remind any who are 100% benefit dependent that if they are sanctioned, they must contact their local authorities.

Traffic Light Scheme for Tenant Assessment by Sharon Betton

A scheme introduced in Hartlepool in 2008 is now being suggested by the National Landlords Association as the way forward and should be adopted country wide, to help landlords to decide which prospective tenant to take. Information  from “Inside Housing” 25th July.

It is a traffic light scheme, with prospective tenants applying to the Council for membership, and then being granted a rating of green, amber or red.  A green card means they have full membership with no anti-social behaviour or rent arrears; the amber (yellow) card gives provisional membership and may indicate an arrears problem in the past, or perhaps because they are unable to obtain a reference due to release from prison or homelessness; a red card shows rejected membership and indicates issues of anti-social behaviour or a history of rent arrears – so either avoid or be prepared to put intensive management in.

Though Linda Igoe, housing advice manager at Hartlepool, said the scheme was designed to “help landlords to sustain tenancies”, but it could also be very useful for young people, often not looked on as good tenants, working or not, for those that cannot get a reference from an obstructive former landlord or those who have had a period of homelessness.

Daniel Brewer of the Real Lettings Scheme has concerns that tenants should not be black-listed.  Sadly, whether intended or not, there will always be an element of this; if this scheme was introduced nationally, not only those with the red card would be viewed with caution, but those who choose not to be registered would be questionable.

If private sector landlords are to continue to help the many very vulnerable people in need of homes, there must be some help for them to safe-guard their businesses.  A national traffic light scheme may just provide the extra security they need.

66,000 homes left empty in London by Sharon Betton

As the election looms closer, we will hear plenty of statistics relating to what has been done and is not working, what needs to be done etc.  Mr. Miliband has promised in his manifesto that, should Labour win the election, 200,000 new properties will be built by 2020.  This is an impressive figure and will cost the country many millions to achieve.

I have queried whether this cost is achievable and whether it is necessary.  An article in “Inside Housing”, 25th July, states that one-third of the 200,000 properties required, are left empty in London.  66,000 properties across 22 London boroughs are empty and more than 1,500 homes in the City of London are not in permanent use.

Whilst Camden have imposed a 150% rate of council tax on empty or second homes,  15 boroughs have not, so far, chosen to use this power.  Boris Johnson, the Mayor of London, has lobbied boroughs to up their council tax rate as a means of combatting the empty properties, saying “it is completely unacceptable having so many empty properties lying around when we have a housing crisis that is causing misery”.  The City of London, however, offers a 50% council tax discount to the owners of empty homes.  They are actually offering an incentive to keep homes empty!

We need the homes we have empty to be filled before any future Government engages in profligate spending of our money on further properties to be left empty.

Further Electioneering?

I suppose that following the high profile of Universal Credit, Mr Miliband’s pronouncement about longer tenancies and rent caps,  that Nick Clegg had to put his vote-catching scheme into the arena.

He has now revealed that for months, he was opposed to the “bedroom tax” and would end it for existing tenants, particularly if they had registered to transfer to a smaller property (though often these are unavailable).

How well has he thought this through?  For existing tenants, finding their Housing Benefit cut at present because they are over-accommodated, or at risk of losing their properties due to rent arrears, this will be a popular move and possibly a vote-winner.  However, he is quite happy that housing associations and local authorities should only allocate properties of the size that the applicant(s) require.  Of course, some years down the line, the tenant may no longer need that size property – will he be protected as an existing tenant?  And, of course, this will not assist private sector landlords, who have had to limit either the size of the accommodation they can allocate, or the rental income they can expect.

I think over the next few months, we will be inundated with sound-bites, all designed to persuade the populace that a vote for them will answer the ills of living in modern Britain.  We can only hope it does!