In October 2013, the UK government plans to make changes to housing benefit. How will these housing benefit changes affect landlords in Scotland?
The Government intends to introduce a single 'universal' credit which will be paid to claimants of working age. The idea is to simplify the system for claimants, and make it easier for staff to administer. The new benefit will begin to be introduced in 2013 and will be completely phased in by 2017.
What will this mean in practice?
- Housing benefit will be abolished as a separate benefit
- Universal credit will include a housing element
- This will be paid directly to the claimant
The present system of housing benefit allows tenants to have their housing benefit paid directly to their landlord. This ensures rent is paid on time and minimises arrears. However, the introduction of universal credit will mean that claimants will be required to make rent payments themselves.
Many housing professionals have expressed concerns that these changes will lead to significant rises in rent arrears as:
- Claimants may not prioritise rent payments
- Claimants under financial pressures will use the 'housing' element of universal credit for other purposes
A number of pilot schemes run by housing associations will run throughout the UK to assess the impact on housing of the universal credit system. In Scotland, Dunedin Canmore Housing Association have volunteered to take part in the pilot scheme which will involve tenants being given their current housing benefit and being asked to make rent payments to the association.
It is hoped that pilot schemes will demonstrate the potential challenges which will arise from the introduction of universal credit and will assist landlords, tenants and DWP staff to identify problems and plan solutions prior to the introduction of the new scheme.
How will it affect Scottish Registered Social Landlords (RSLs) and Private Landlords?
It is likely that many RSLs and landlords will need to amend policies and practices to deal with the introduction of this new benefit. Combined with the forthcoming introduction of 'pre action requirements' the next 18 months will mean a period of significant change to rent arrears and eviction procedures.
As always we will be happy to provide advice and assistance to Scottish landlords to enable them to review their procedures in the run-up to these significant changes. If you would like more information or advice please contact our team.