Direct payments may be halted

Property investors with an interest in landlord insurance will be delighted with the news that the Government are backing down on parts of the universal benefit payment system set to be implemented later next year.

After months of wrangling the Coalition Government have agreed to review the consequences of paying the housing element of the new universal credit system directly to tenants. The direct payments were a key part of the Governments Welfare Reform Bill but were unwelcome by tenants and landlords alike.

Landlords feared the system would result in them accruing large rental arrears from tenants, and many tenants preferred to have their rental payments deducted from their welfare payments before they were tempted to use it for something else.

For many months landlord organisations have pleaded with the Government to change their minds. Landlords in all corners of the country said they would no longer prepared to take on tenants on benefits and would instead only rent out to employed people. With demand outstripping supply most landlords can pick and choose at the moment.

Yesterday, however, the Government said a team from Sheffield Hallam University led by Professor Paul Hickman would review the effect the direct payments have had on the communities in the six experimental areas it has been set up. Welcoming the move, Alan Ward of the Residential Landlords Association said: “It seems remarkable that the Government has so far denied tenants the ability to choose how their housing benefit is paid.

“While the RLA will continue, along with groups representing tenants, social housing providers and mortgage lenders, to champion the rights of tenants to choose, we welcome the minister’s decision to establish a review of direct payments.”

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