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Government to scrap direct housing benefit payments to landlords

New procedures for the payment of universal credit has been released by the Government – The Government confirms that if a tenant is in arrears the landlord’s right to insist on direct rent payments will be scrapped. Payments will be made directly to tenants and it will be up to them to pay their rents or not. The proposals will mean the end of direct payment to landlords for rent as we have known it, and the new procedures will apply across the board to local authority tenants, housing association tenants and tenants in the private rented sector.

Why is there a serious concern about the proposal?

1. No back stop provision under which a landlord can demand payment direct.

2. Lack of clarity/much greater individual discretion in operating these rules because “guidance” replaces regulations.

3. No means of redress for landlords if things go wrong/no rights of appeal.

4. No proposal that the guidance should reflect the landlord’s interests to make sure that rent is paid and that a roof is kept over the head of the claimant.

5. The whole concept of trying to improve tenant’s responsibility at the cost of much greater risk to landlords with strong likelihood of significantly higher arrears.

6. Much less likelihood of landlords being willing to take on benefit claimants. This could even translate into less likelihood of a willingness to take on claimants who are in work especially part time work because the same rules will apply to them.

7. No provision for first payment of benefit direct to the landlord.

8. It has been argued that there should be a right for landlords to be paid direct payments once there are six weeks arrears and also that the whole system of vulnerability should be assessed according to the tenant’s interest of keeping a roof over their head and the landlord’s interest to receive the money, as well as the public interest of making sure that the benefit is used for its intended purpose. As a consequence this will create a much higher level of arrears, an unwillingness of landlords to house benefit claimants, increased unwillingness by banks to lend for this kind of property, much higher levels of evictions and much greater homelessness. Landlords will now have to review their procedures and plan on how to monitor payments as payments will be paid calendar monthly and in advance.

Landlords should be able to come up ways how to counteract the new procedure. New procedures for the payment of universal credit has been released by the Government – The Government confirms that if a tenant is in arrears the landlord’s right to insist on direct rent payments will be scrapped. Payments will be made directly to tenants and it will be up to them to pay their rents or not. The proposals will mean the end of direct payment to landlords for rent as we have known it, and the new procedures will apply across the board to local authority tenants, housing association tenants and tenants in the private rented sector.

Landlords will now have to review their procedures and plan on how to monitor payments as payments will be paid calendar monthly and in advance. Landlords should be able to come up ways how to counteract the new procedure.
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