Private landlords have for some time had to put up with the rules which provide for payment to go direct to the tenants. Only in two circumstances -
- where the tenant is deemed ‘vulnerable’ (which has to be specially applied for) or
- if the tenant is over 8 weeks in arrears of rent
will payment be made to the landlord direct.
Social housing providers have, until now, still had payment made direct to them in the majority of cases. However with the benefit changes planned by the government, this is set to change.
The reasoning behind this is to ‘empower’ tenants by getting them to take responsibility for their lives and financial affairs.
However, as a benefit manager I was listening to at a talk last night rightly pointed out, for persons with chaotic lifestyles, there are better ways of training them to manage their finances than giving them a large sum of money once a month.
Southwark’s project has been focusing on what actually happens in this situation. Here are their findings:
- Only 60 per cent of the tenants identified for the pilot were successfully moved onto the scheme
- There is a lack of understanding about personal finance among some tenants and some were unable to obtain a bank account
- 11 per cent of those originally identified for the pilot refused or were unable to engage with the council, and 14 per cent were later deemed too vulnerable to take part
Following on from this, Southwark estimate that when direct payment is borough wide, their rent arrears could increase by 14 million, with extra administration costs of £400,000.
Cllr Richard Livingstone said
What has been exposed by our pilot is that social landlords are likely to face such high levels of debt that direct payments could bring social housing as we know it to an end
A worrying prospect.
Private landlords are unlikely to want to take up the slack. Already they are fleeing from benefit tenants like the wind, and even those prepared to consider the idea may well find their their mortgage lender prohibits it.
Worrying times indeed. You can read more about the project here.