Benefit Changes: Could they affect you? If you are a private landlord renting to tenants on housing benefit, you are likely to be affected by the government’s changes to the benefit system. Change is taking place that will mean that many tenants will find their benefits reduced, and that benefits will be paid to the tenant rather than directly to the landlord.
This could mean that tenants struggle to meet their rent payments. Landlords are already suffering from record levels of tenant arrears, with around 10% of rent either late or unpaid. Is there anything that you can do as a landlord to prevent benefit changes from causing you potentially serious financial problems?
To let or not to let
Many landlords refuse to let to tenants on housing benefit because they fear that changes to the system or payment delays will cause them difficulties. But with council and housing association homes in short supply, private landlords are needed to fill the gap in the market. If you are tempted to pull out of letting to tenants on benefits because of the changes, think carefully. If your tenants are generally good tenants, should you really risk losing them? You can do a lot to avoid running into problems by doing some basic preparation in advance of the changes.
Helping tenants to help you
The two main changes to the system are the introduction of a £500 a week total benefit cap from April 2013, and the introduction of a combined system of benefits to include housing benefit (paid to tenants) from October 2013. The key to avoiding problems is to work with your tenants. They are probably at least as worried, if not more so, than you are and will welcome an open discussion about the changes.
A good relationship
Develop a good relationship with your tenants so that they are likely to feel able to talk to you if they run into difficulties. If you think that your tenants are likely to be affected by the benefit cap (possible in expensive areas and for larger families where no-one is working), you need to know what to do if they do start to get into arrears. Always try and make an agreement with them to pay back arrears over time if possible, as eviction will almost certainly be much more costly. Speak to your tenants and see if you can do anything to make it easier for them to budget once the universal credit kicks in and they are paid their benefits directly – it might be better if they pay rent weekly or fortnightly than monthly, for example. Finally, check your landlord insurance. If it doesn’t include cover for arrears, now might be the time to add it.