Have you always wanted a lovely English cottage by a river? So have a lot of English people, some of whom can’t afford to be so picky about their housing. Just more than one million tenants who rent from private landlords in the UK rely on some level of government benefits to pay part or all of their rent. They receive housing assistance because of disabilities, unemployment or other issues that make it hard for them to meet their expenses, and the government is about to change the way these benefits are administered.
In response, confused and upset landlords are threatening to refuse to accept tenants who receive the housing benefit.
Historically, the system paid out benefits to tenants directly, but if they missed two months of rent, the benefit would switch to the landlord, ensuring that people kept their homes. In addition, this policy kept landlords cooperative — many landlords are uneasy to rent to people on benefits due to social attitudes about poverty and benefits claimants. By confirming that they would receive their rent no matter what, the policy was designed to keep as many landlords as possible renting to tenants on benefits.
Under the new system, known as universal credit, the goal is to encourage people who receive government benefits to learn to manage their money effectively and appropriately. This is a concern in both the UK and U.S., where many low-income people have limited financial literacy, in no small part because they’ve never really had finances to manage. Without that literacy, upward mobility can be very difficult to achieve, and people can experience more financial hardship because they don’t know how to maximize the money they do have. Universal credit could be transformative for people on benefits, but it has landlords worried.
Why? Because they’re hearing the part about managing money independently, but they’re not hearing the other part of the story: as before, if tenants default on their rent for two months, the benefit will go straight to the landlord. Under universal credit, the first default will trigger a review and discussion, giving tenants an opportunity to figure out what went wrong and why. If there’s another, the benefits will revert. At maximum, landlords would be missing two months’ worth of rent, which might be a concern for a small landlord with only a few properties, but the landlords who are protesting are among the UK’s largest.
Landlords with hundreds and in some cases thousands of units are claiming that they’ll refuse to accept tenants who plan to pay their rent with benefits, out of concern that they’ll end up with high default rates and they’ll have trouble recovering the funds. That’s bad news for people on benefits, who already face housing discrimination and would find it even harder to seek accommodations if landlords follow through on their threats — especially if as many as 75% do it, as some promise.
The situation is even more complicated for tenants with young children, older people and people with disabilities, who may have specific housing needs that limit their opportunities even more. Someone who uses a wheelchair for mobility, for example, needs an accessible house and thus has fewer units available to her to look at. If all the accessible housing is controlled by people who won’t take her benefits, she could be facing homelessness, forced institutionalization, or a forced relocation to an unfamiliar place without friends, family and support network.
The controversy, and confusion, reflect the need to educate landlords about how the new administration of benefits will work, and what they can do to ensure their tenants remain on-track with the rent. Already, landlords Fergus and Judith Wilson have made waves in Britain by sending out 200 eviction notices to tenants on welfare — regardless of their status — and they’ve stated that they will not be accepting benefits claimants as tenants in the future.
Given the large number of properties they control, this decision will have serious ramifications for Britons who need a little extra help to get by, and the fact that it may encourage other landlords to do the same bodes even more ill.
Photo credit: Jason Ballard.