The shake-up in benefit payments that could come into force as early as next year is still unclear says North East lettings expert, Ajay Jagota.
Ajay, who is managing director of KIS Lettings, which has branches in South Shields, North Shelds and Sunderland, is concerned that there are still huge questions surrounding the Government’s plans to reform the benefit system.
In his previous post, Ajay aired his concerns over the proposed Universal Credit system. The main potential issue for landlords was that local housing allowance (LHA) would be combined into the single universal payment which would continue to go direct to the tenant.
However, in recent parliamentary questions, Work and Pensions Minister Chris Grayling said the Department for Work and Pensions would have the capacity to make payments to landlords from the start of Universal Credit.
Ajay said: “On the one hand we’re being told LHA will continue to be paid direct to tenants and will come under one umbrella payment with any of the other main benefits, but then the Minister has stated that there will be potential for the payment to go direct to landlords.
“There are several issues with the proposed new system and the ability to make the LHA payment to landlords. Payments are to be made through one central office and each claimant gets one sum which is not broken down in terms of allowances per benefit .
“Therefore, I have difficulty in understanding how the Government will pay landlords in the new system. How will LHA allowance be calculated and who will be responsible for managing and issuing individual direct landlord payments? It will take a lot of administration.
“Yet, it’s clear the Universal Credit system was established to reduce the amount of and cost of several regional administration offices as well as providing a way of reducing benefit payments. If LHA is to be reduced then we, as landlords, need to hear what those reductions are. There needs to be the clarity and transparency we currently have where LHA payment amounts, eligibility and criteria are published so landlords can make an informed decision before taking on a tenant.
“There will also need to be an agreed system for those tenants who fail to pay their rent out of their single benefit payment. Currently landlords can request direct payments once a tenant is eight weeks in arrears, but will this continue?
“What is concerning is that we currently have a system that works for landlords and tenants and the impending benefit reform is going to have a huge impact. Private landlords will be affected, but more so, those operating within the social housing sector, who have never had to deal with payments being made direct to their tenants, are bound to suffer.
“Now is the time for the social housing sector to work closely with the private rented sector and learn from the two years’ experience they have of dealing with tenant-direct LHA payments.”