30 Nov 2010
Policy area: Residential
Landlords today warned that the Government was in danger of breaking a pre-election promise to pay housing benefit directly to landlords after it spurned a golden opportunity to clarify its policy with the publication of important housing benefit legislation.
Responding to reforms of the housing benefit system announced today, the British Property Federation welcomed plans for a limited return to direct payment, where rent is paid direct to landlords rather than their tenants, but urged ministers not to backtrack on pre-election pledges to restore direct payment in full – a move that would save taxpayers millions of pounds.
Lord Freud, the minister for Welfare Reform, today unveiled plans to give local authorities the power to re-introduce direct payment, but only in exceptional circumstances, for a limited time, and only if landlords lower their rents.
However, the BPF argued that this assumes that housing benefit keeps rents artificially high, when in fact many areas have such high demand for housing that benefit cuts will make little difference to what landlords charge.
Landlord groups, alongside homeless charities, have campaigned for the return of direct payment since it was removed in 2008. It is now clear that this has lead to increased rent arrears and evictions, and has caused money intended to be spent on welfare to leak out of the benefits system, costing taxpayers hundreds of millions of pounds. Conservative Party ministers had pledged to restore full direct payment before May’s General Election.
Ian Fletcher, Director of Policy, said: “Restoring direct payment to all private landlords was an unequivocal Conservative Party pre-election promise, which should be honoured. Without payment to landlords, taxpayers might well ask why politicians are not protecting them from hundreds of millions of pounds in squandered housing benefit, and why Government is not doing more to keep people in their homes during tough times. We urge local authorities to ignore the small print and apply these new rules broadly so that landlords are offered the support to keep renting to claimants.
“There is a strong body of evidence that shows that the Government’s policy of paying Local Housing Allowance to tenants leads to rent arrears and evictions. And as the Government’s reductions in LHA take effect, it is likely that more tenancies will be under pressure as tenants struggle to pay the rent.”