Landlords threaten mass exodus

Tennant says she isn’t sure how much the local authority can do to reassure landlords about a national government policy. She believes evictions are inevitable, partly because of the hassle factor involved. ‘Some tenants have said they won’t be able to afford the bus fare up here with the cheque, so we’ll essentially be debt collectors.’ But there is also a trust issue. ‘Some of our housing benefit tenants are better at paying their rent than our professional tenants. But some will not pay up. We are asking our landlords: “Do you want to take the risk or don’t you?”’

Brian Adair, chair of the Association of Residential Letting Agents in Scotland and chief executive of Ryden Homes, says his lettings company will warn landlords not to take on housing benefit tenants because it’s just too much trouble. ‘We’ll be telling them “No DSS”. If you were a landlord of ours you’d be thinking we weren’t doing our job properly if we didn’t warn you about this. Landlords already have problems with housing benefit, but they put up with because they know they’ll probably get the money from the council in the end. That won’t be the case when you’re chasing Joe or Jill Bloggs for it.’

In Edinburgh, Residential Landlords Association (RLA) chair John Blackwood points out that it tends to be the larger Edinburgh landlords who get involved in the housing benefit market, so the withdrawal of just a few could have a significant impact on the supply of rented accommodation in a city already in crisis.

Elsewhere in Scotland, landlords are watching the results of the Edinburgh pathfinder. In Inverness Stephen Peasnall, who sits on a government committee designed to improve liaison between landlords and government, says that if direct payment of housing benefit goes nationwide, he will sell his 60 properties – all rented to people on housing benefit, paid direct to him. ‘I will pull out of the sector. The DWP says we’re being alarmist, “just wait and see”. There are safeguards, for example the first cheque being made out to the landlord. But if the second cheque goes astray we’re talking about arrears. If you have a lot of tenants you’ll lose out very badly.’

Peasnall claims some Inverness landlords are already taking advantage of a rising sales market and turning their bedsits back into flats. ‘Early indications are that it could be very serious. I’ve spoken to lots of landlords who take a dim view. They’re talking from experience. This has been tried before and because it was so wanting, direct payment to landlords was introduced. This is a retrograde step.’

In Brighton, where the new system is being introduced in January, the private rented sector could also be closed off to people on low or no incomes. Mike Stimpson, chair of the Southern Private Landlords Association (SPLA), warns that his 700 members have discussed a mass withdrawal from the housing benefit market at the slightest indication that they will be out of pocket. ‘Out of my 80 tenants on housing benefit I could name to you the ones who will pay and the ones who will not. More than one or two significant signs of non-payment, and I will get rid of them all – to show government that it hasn’t listened.’

Stimpson, who also chairs the National Federation of Residential Landlords and liaises with the government on issues like housing benefit reform, says the SPLA may well recommend its members also opt out of the housing benefit rental market. ‘We’ve agreed we’ll all stop taking HB tenants in Brighton if landlords start experiencing higher levels of rent arrears through the new system and if local authorities are not being helpful.’

He points out that the impact on homelessness in the city could be enormous. ‘The private rented sector in Brighton is twice as big as the social housing sector, but we’re still not providing sufficient affordable housing. There is already a crisis in Brighton without this.’

In Brighton, where there is a high demand for rented housing, landlords could afford to make this decision, he says. ‘We’ll support landlords in low demand areas by stopping it in high demand areas.’

In North Wales, where the supply of private rented accommodation tends to exceed supply, landlords in the pathfinder area of Conwy are also anxious. ‘Where alternative accommodation is available, tenants won’t try so hard to maintain their tenancies. Landlords here are looking at the options,’ says Mike Espley, secretary of the North Wales Landlords Association. ‘In some parts of North Wales, up to 95 per cent of private tenants are on housing benefit, so the consequences could be dire.’

Espley also says encouraging tenants to choose cheaper accommodation, and spend the savings they make on other things will have a ‘ghetto effect’ in areas of low demand, creating neighbourhoods of very poor people living in substandard accommodation.

In the pathfinder area of North East Lincolnshire, local landlords chair John Spinner says members are already pulling out of the housing benefit market. ‘Landlords keep their cards close to their chest, but some have already sold up and some are saying they won’t rent to benefit tenants. Those landlords think there are enough people in jobs. In the paper there are lots of adverts saying “No DSS”.’

Particularly at risk are tenants with a history of non-payment, he warns. ‘Landlords that find it difficult to collect top-up payments, where housing benefit doesn’t cover the whole rent are already giving notices to quit. A lot of my members already can’t collect the £10 top-up. They have all the Sky telly and the playstations, but they can’t pay the top-up.’

Spinner says it’s just about making ends meet. ‘There is a misconception that landlords are rich. I have got one house down the road. I put between £40,000 and £50,000 into it, and expect a better return than the building society for the work I do. Some of my tenants are very good, but some are not. When you go to them for the top up they shout at you that they can’t give you what they haven’t “effing” got.’

Chair of the Residential Landlords Association in England, Martin Moylan, says his members tell him a housing benefit exodus is a very real risk. ‘Generally landlords aren’t interested in HB tenants unless they’ve got no chance in other markets. The primary reason is complexity of administration and low rates, but landlords are also not prepared to be moral custodians for tenants.’

Moylan also points to anecdotal evidence of landlords preparing for the worst, with applications for places on the RLA’s courses on possessions up.

In the East of England, local landlords association executive officer Derek Leech confirms that his members are worried, and says that many will only take housing benefit tenants if rent is paid direct to them.

In Liverpool and surrounding areas, it is a ‘panic situation’, says Lynn Smith, chair of the North West Property Owners’ Association. ‘Landlords know it will affect their business because it is highly likely that housing benefit will not be passed on. I’m only a small landlord and I think I’ll be able to collect the rent from my tenants, but I know many others are taking advantage of the housing market and selling up. The real problem is homelessness as landlords end up going to court. Landlords around here have a lot of DSS referral tenants, they’re picking up the pieces for local authorities who can’t house them. These are vulnerable people.’

Meanwhile Peter Swift, at Gloucestershire Landlords’ Association says local members have discussed the changes. ‘There’s been a mixed reaction. Some have pulled out of housing benefit anyway because they’re fed up with being messed around by the city council. Some are concerned that people will move into very substandard accommodation and spend the balance on things they shouldn’t.’

A question posted by ROOF on the RLA web forum elicited entirely negative responses to the proposal for direct payment. One typical landlord writes: ‘I’m renting to 14 housing benefit claimants and it’s hard enough trying to get payment from the council. If payments are made to tenants the chances of us receiving it are pretty slim, as I have already found out to my cost. Should this become the norm, I will withdraw my stock from the market.’

The reactions from landlords and agents contacted by ROOF will make uncomfortable reading for ministers – even if complaints are inevitable ahead of such a major change. Landlords clearly realise how vital they are to government policy – and the muscle that gives them if they refuse to co-operate. As one lettings agent warned: ‘We could serve notice on all our housing benefit tenants at once and ask them to go to the city council and tell them they’re homeless. That might change things.’

If the reforms do force private tenants out of their existing accommodation, landlords are clear that it will no longer be their problem. ‘Direct payment will cause the pathfinders to fail, and the problem will end up back on the government’s doorstep,’ says one landlord. ‘Landlords will suffer first but we can opt out.’

The pathfinders

What could be the biggest shake-up of housing benefit since the subsidy was introduced went live in Blackpool on Monday 17 November (See page 24). The Local Housing Allowance (LHA) is a flat-rate benefit based on household size for all private rented sector tenants that are not covered by restrictions such as controlled rents.

The government’s rationale is to give tenants a clear idea of the cash they have to spend on housing. Tenants will be able to keep any allowance should they find a home below the allowance rate. If they find a more expensive property they will have to make up the difference.

The Blackpool pathfinder is followed by Lewisham in December. The London borough will start all new claims on the LHA followed by claim renewals and cases that come up for referral. Coventry and Teignbridge councils start the scheme in January.

Devon and Cornwall housing association regional housing manager Frances Esau is keeping a watching brief on the scheme even though social housing tenants are not included in the pathfinders. Teignbridge has sent out newsletters to all affected landlords and tenants. Coventry is also phasing the scheme. The council has arranged a presentation day to banks to promote the provision of a basic bank account.

In February, Brighton and Hove, Edinburgh, North East Lincolnshire, Conwy and Leeds councils change to the new arrangement. This month North East Lincolnshire council starts a series of roadshows in supermarkets and shopping precincts to spread the word. Members of the council’s benefits office will be there to answer tenants and landlords queries. The council is also developing a tenants’ pack on how to claim the new allowance but also what to do if you are served with an eviction notice or need the landlord to carry out repairs, plus where to get debt advice. The DWP is funding money advisers in all the regions to carry out debt advice.