Landlord's Right To Receive Rent Direct Will Be Scrapped Under New Benefit Rules

[plummet expert]

http://www.landlordtoday.co.uk/news_features/Landlords-right-to-receive-rent-scrapped-under-new-benefits-scheme

I know we discussed this before - will it make BTL less appealing?

Thanks to SarahBell on main board

YES!

[Peter Hun]

YES!

The consequence of which will make renting to those tenants less appealing and those that do will charge more for the added risk.

Bottom line, BTL will make more money, tenants will run off with rent and Taxpayer will get the bill.

[S S]

http://www.landlordtoday.co.uk/news_features/Landlords-right-to-receive-rent-scrapped-under-new-benefits-scheme

I know we discussed this before - will it make BTL less appealing?

Thanks to SarahBell on main board

I would say yes, it would be less appealing.

As a tax payer, I would like to see rent being paid directly to the landlord, simply to remove the temptation for the tenant to spend their LHA on smokes, drink or even the latest smart phone. Leaving the tax/rate payer to pick up another bill further down the line when the tenant needs a bail out from rent arrears.

I would like to see a system were rent, electric, heating and food is paid directly to suppliers to provide the basics. Then a small amount of money being paid to the benefit recipient.

Friend of my wife was moaning recently how hard things are, she's on benefits ironically as she laughed at a joke on her iphone, a quick calculation in my head at the time was

LHA £450 per month (includes rates)

Job seekers/ income support single mum £300 per month

Child benefit for 2 £130 per month

Child tax credits family with 2 kids £450 per month

She has an "X" but thats a whole other calulation. But he doesn't live with her, aye right

Roughly £1,330 tax free, How much does the average 26 year old get after tax?

Just my thoughts.

.

[wild card]

It will put off some landlords but only the ones who shouldn't be or don't want to be landlords anyway. All 'occupations' and 'investment' opportunities are subject to change. Such is life. Any decent landlord with a long term plan will not be put off by sensible regulation. Providing decent housing is a responsible position and should only be done by those who understand this and are willing to comply with set procedures.

And for the landlords who say they will simply refuse HB tenants, well, when faced with a HB tenant or no tenant I have no doubt which they will choose. Although a lot of landlords state no HB, the reality is, that they do accept it. During 2010/2011 £361.4m was paid to the private sector for HB claims in NI. This does include housing association rent too but a substantial amount of this is paid to private landlords. http://www.nihe.gov.uk/housing_benefit/

That's too big a pot for landlords to lose or ignore. So regardless of whether LL's want HB tenants or not they may be financially forced to comply with regulation and accept HB tenants. So BTL will be less appealing for new comers but LL's already in the market may just find themselves stuck with it.

Of course the LL's will try to pass on the increase cost of regulation to tenants. But if rents are unaffordable, then no amount of wishful thinking by the LL's will change that. They will be forced to accept what they can get, have empty properties or get out.

Nobody ever forced anybody to become a LL so if they don't like it they can always sell up That would also provide more houses for sale.

We should also have a Tenants Ombudsman, deposit protection and landlords should be licensed.

Nobody ever asks for working peoples rent to be paid directly from employer to landlord. I wonder is there any evidence that HB tenants are more likely to not pay their rent or is the perception based on stereotypes media whipped into our society to hide the cesspit of tax avoidance and large scale fraud at the top.

Edited June 30, 2012 by fixed

[Ride_on]

The consequence of which will make renting to those tenants less appealing and those that do will charge more for the added risk.

Bottom line, BTL will make more money, tenants will run off with rent and Taxpayer will get the bill.

So you think that LLs can just charge what they want and the market will pay?

Unlike house selling renting is required to come from recently earned money, cheap credit will not be easily given to pay rent, the market value is fairly accurate IMO and LL cannot just charge what they want and expect to make a profit.

The problem is social housing, and gov't gave huge incentives (large benefits to claimants+direct payment) to make the private industry interested. Instead of investing more they sold of the stock (cheaply) to occupiers netting them money, and reducing claimants, now they find with a new generation of social needs that those incentives are not sustainable and that long term it would have been better to invest. Short term they had a win-win, now it lose-lose.

The move to universal credit has already started to affect rents downwards, by your argument it would have an upward effect.

[BelfastVI]

I think this will have a downward effect on rents as LL start to insist in non-DHSS again.

The biggest looser here will be the housing associations and the HE.

I cant remember the numbersw but its something like 60,000 houses owned by the HE and 30,000 by the Housing Associations.

over 60% of their rent is from benefits and paid directly to them by the government. they only have to worry about collecting the other 30%. which is a big problem. The HA's clain to have less than 5% rent arreares. However thats taken as a % of total income (which 60% is guaranteed). Just think of what their rent arrears will be under the new system.

They will find out the hard way that spending tax payers money to chase taxpayers money is not a good idea. In 4 or 5 years, after spending £m's on new syestems and court fees they will revert.

[Shotoflight]

Housing Benefit (posted earlier)

http://www.nihe.gov.uk/housing_benefit

During 2010/11 we paid out a total of £573.3m in Housing Benefit. £211.9m was paid in respect of public sector claims and £361.4m in respect of private sector claims (this includes payments for housing association tenant claims).

This was an increase of 10.7% over the previous year. The number of people receiving Housing Benefit increased by 4.3% during the year to a total of 156,991 (68,121 in Housing Executive tenancies, 22,395 in housing association tenancies and 66,475 in the private rented sector).

In addition, a further £2.2m was paid to 17,867 Rate Relief claimants and £0.5m was paid to 4,147 Lone Pensioner Allowance claimants.

http://www.niassembly.gov.uk/Assembly-Business/Official-Report/Committee-Minutes-of-Evidence/April-2012/Review-of-the-Northern-Ireland-Housing-Executive/

Stewart Cuddy - NIHE director

We are also concerned about that because, with the proposed changes in welfare reform and universal credit, one of the big issues is that you may not — it depends on what happens — get direct rent payments to the landlord. If the benefit payments for all sources go directly to the household, it is going to work for some of them, there is no doubt about it, and I am sure it will be a good thing for a lot of people, but, equally, there will be a large number of people who will find that very difficult. Our conservative estimates are that our rent arrears are likely to go up by between £10 million and £15 million a year in that sort of scenario, so we would need to look for ways in which we can help tenants to better manage their resources.

Lastly, the other thing that we are very conscious of is that the Housing Executive is a big landlord, and four in five of our tenants live in households where no one is in paid employment.

http://www.nihe.gov.uk/rent_increases_2012

Social Development Minister, Nelson McCausland announced that the increase in Housing Executive rents will equate to around £3.64 a week.

The average weekly increase for tenants will be 6.6% effective from the 1st April 2012.

Almost 80% of Housing Executive tenants will not have to pay this additional sum as they are on Housing Benefit.

Edited July 15, 2012 by Shotoflight