Proposed changes to benefit payments will impact private rented sector landlords - not just social landlords
Proposed changes to housing benefit (HB) will not only have significant and severe implications for the tenant in receipt of benefit, it will also have serious financial consequences for the private landlord, according to CIH Northern Ireland.
Under the current payments system, HB is supposed to cover the cheapest 30 per cent of private rents in a local area, in order to provide security of tenure for the most vulnerable private tenants. However, as HB rates have been frozen at the 2015/16 rate despite rising rents, figures available for 2016 show that 80 per cent of HB rates in Northern Ireland have already fallen below the cheapest 30 per cent of homes in the local area.
According to Nicola McCrudden, director for CIH Northern Ireland:
“If private tenants’ rents are higher than the amount of HB received, they simply have to make up the difference themselves. As a result, if people can’t afford to pay the difference out of their income and benefits intended for other essential living expenses, they will quickly fall into rent arrears, risking legal action, eviction and homelessness. The scale of this problem, and its potential impact on the private rented sector, can be seen in the fact that in 2013, more than 60,000 private tenants in Northern Ireland received HB totalling more than £300 million.”
With the current HB system to be replaced, in the near future, by a new system of universal credit (UC), it is extremely important that private landlords understand the key elements of these proposed changes, in order to appreciate the impact they will have on them, from a financial perspective:
- One single-payment will replace six existing benefits and tax credits
- In Northern Ireland, although the default position will be to pay the housing costs part of UC directly to private landlords as one monthly payment, tenants will be able to opt out of this direct payment method and, instead, apply to have this money paid to them directly
- New UC claimants will normally have to wait between 6-10 weeks for their first payment – this will affect their own personal financial situation and the landlord who may experience a rent delay or shortfall.
If you are a private landlord and would like to find out more about the proposed changes to housing benefit payments, and learn about laws and regulations affecting landlords, book a place on one of our upcoming courses.
For more information please contact Alan Shanley, marketing and communications officer on 028 9077 8222 or at firstname.lastname@example.org.
Notes to editors:
The Chartered Institute of Housing (CIH) is the independent voice for housing and the home of professional standards. Our goal is simple – to provide housing professionals with the advice, support and knowledge they need to be brilliant. CIH is a registered charity and not-for-profit organisation. This means that the money we make is put back into the organisation and funds the activities we carry out to support the housing sector. We have a diverse membership of people who work in both the public and private sectors, in 20 countries on five continents across the world.