Member Article

Benefits changes leave tenants ?breakdown from disaster"

A leading North East lettings agent is warning landlords to “prepare for the worst” ahead of benefit reforms which could leave tenants “a broken washing machine away from not paying rent”.

The government’s flagship benefit reforms will see tenants who receive housing benefit paid their rent money direct and trusted to pass it on to landlords, despite pilot schemes seeing a seven-fold rise in rent arrears as a result.

The changes will see benefits rolled into a single credit paid directly to their bank account every month with Housing Benefit becoming part of the new Universal Credit -meaning an end to the current system where payments are made straight landlords, reducing the risk of tenants falling into arrears.

Ajay Jagota of KIS Lettings, who manage properties for some 700 landlords across the North East from branches in Sunderland, North Tyneside and South Tyneside, fears that the changes may push tenants and landlords alike into financial difficulties.

He said: “News that almost half of British families are struggling beneath the breadline shows how precarious the financial situation is in many UK households – and any unexpected expenditure could leave them with impossible choices. Put simply, they could be a breakdown or broken washing machine away from not paying rent.

“My advice to landlords is to make sure they are prepared from the worst case scenario. Make sure they have contingency plans in place should they need to look at how they manage sudden surges in rent arrears, both in terms of their own finances and those of their tenants.

“Stable long-term tenancies are the lifeblood of the private rental sector, and my fear is that the government’s reforms are jeopardising them.

“No landlord wants to evict tenants. Regardless of the emotional impact on tenants and landlords alike, not only are evictions expensive, empty property equals no income.

“And sadly there is a very real risk that evictions are going to be inevitable, so they’ll need to make sure they know current evictions law inside out – or at the very engaging an expert lettings professional to take care of these matters.

“The worst of it is, it is clear to me that these pilots are an at best partial examinations of the impact of Universal Credit, investigating not the full implementation of Universal Credit but just the direct payments of current housing benefits - so how can it be a worthwhile test of universal credit? It could be that the government is going in completely blind.

“Even if they aren’t, I would call on them to look at the results of their own pilots and think again – making changes where necessary like they have been forced to over the Bedroom Tax.

“I can see the logic in what they’re trying to do, but with having stockpiled evidence of problems ahead and with reports of computer chaos too, wouldn’t it be sensible not to plough ahead with something so apparently unsustainable?”

This was posted in Bdaily's Members' News section by Ajay Jagota .