In 2008 the Labour government gave private landlords a gift that would allow them to stop maintaining their properties are have a guaranteed income based not on the quality of their properties but the size.
In the local authority where I worked prior to Local Housing Allowance there was a wide variation of rents. The good properties went for good amounts and the dross was a good 20 to 30% cheaper. Slum landlords got the absolute minimum.
However with the arrival of Local Housing Allowance meant that slum landlords could increase their rents in line with the figures provided. In my authority a 2 bedrom flat would guarantee the landlord an income of £650.00 per month regardless of its quality.
If their tenants complained then the landlord would simply issue them with a 2 months notice to quit safe int the knowledge that there was no shortfall of desperate tenants who would move in no matter the quality of the accommodation.
The quality of private rental accommodation in the area I live is shocking and has declined sharply following the introduction of Local housing Allowance as the need to maintain properties for vulnerable tenants has all but disappeared.
I have been reading through landlords comments on message boards and twitter and it is clear that some are terrified of the implications of Universal Credit. What makes their comments interesting is that their fears are much the same as their tenants. The fear of the unknown. With Local Housing Allowance you know what you can charge in rent however with Universal Credit the Housing element is unknown in many areas.
For any landlords worried about the effect of their tenants being paid directly they would do well to make sure that their properties are of a high standard. I know of a slum landlord who had let his properties become completely run down and had the management of them taken over by the local council (after they had issued him with a hefty fine).
They appointed a managing agent to look after the properties on the agreement that his many tenants Local Housing Allowance was paid to the agent and no money was to be transferred to the landlord until all maintenance issues were sorted. The effect of this change 24 months on is that for these manged properties there are NO RENT ARREARS and the Victorian properties he has converted to H.M.O’s are now looking absolutely beautiful.
The landlord is still receiving a 5 figure payment each month for housing vulnerable tenants. The profit will always be there for providing homes that local authorities can no longer offer. In my opinion however it will be the landlords who manage and maintain their properties well who will profit the most under Universal Credit.
So will Universal Credit lead to an improvement in private rental accommodation? I would argue that by placing power in the hands of the customers then the answer is yes.
- Majority of private landlords wary of Universal Credit (24dash.com)
- ‘We won’t reduce the rent … We’ll kick them out’: Research Reveals Landlord’s Response to Housing Benefit Reform (johnnyvoid.wordpress.com)