Universal Credit. 20-30% don't pay the rent.

[CogitoErgoSometimes]

Article

Anyone pick up on this story? As part of the move to Universal Credit where claimants are given a sum of money each month and expected to manage it, a pilot study showed that about 20 - 30% of recipients failed to pay the rent on time. Given cash rather than the money going directly to the landlord, a surprising number defaulted on the rent. Extrapolated up a 20 -30% failure rate would be disastrous and plans are having to be drawn on how to support people in running household budgets and setting priorities.

I'm largely a supporter of UC as I think the current system is over-complex. I also realise that money-management doesn't come naturally to many. But if such a large percentage of people would struggle to manage a monthly benefit income this way, how would they make the transition to paid employment?

[TheDreadedFoosa]

I dont understand this tbh.

It has been a long time since housing benefit was paid directly to the landlord.

[MrsjREwing]

It will be very difficult if you claim uc to get a ll with those stats.

[girlylala0807]

I think thats the point to be honest. People are afraid to get jobs because they get paid monthly. If benefits also get paid monthly then it is supposed to be less stressful a transition. I am not shocked by those figures though. Its going to take some people a long time to get the hang of it.

[Chopstheduck]

agree with foosa. It's only paid directly now if you request it espeically or the council decides to because of prior history of not paying on time.

It's already difficult to rent privately when claiming HB because of the associated higher risks of non payment. Frustrating for tenants like me, who depend on HB to help with rent.

[SamSmalaidh]

What percentage of housing benefit claimants now don't pay rent? I don't really see the difference.

[Pixel]

Have I read the article right, that they've only tested it on social housing tenants? Because if so I think that will skew the figures. People in social housing don't have to renew their leases every year so are at much less risk of getting chucked out if they don't keep up with the rent, so I think it's easier for some of them to ignore. Not so much that they can't budget but it's a different priority. We rent privately and although we need a top up from HB to be able to afford it we know that the rent has to be paid first and then worry about the other bills after that, otherwise we will soon be out on the street.

[Pixel]

I'm not tarring everyone with the same brush before anyone gets upset btw, just I think that for some the mindset is that they believe they will always be rehoused.

[Leithlurker]

Pixel: You are speaking in general, some in fact most social landlords are very proactive about housing arrears. Some city councils are the ones that start proceedings well ahead of any private landlords.

Whilst it might be useful to imagine that it will only be those that have the most chaotic of lifestyles that are likely to use the rent money for other things, I would suggest very many HB claimants will be low waged and will be the ones who will be most likely to use the rent money to cover emergencies or unexpected large expenses like car breakdown, or large fuel bills.

[niceguy2]

There's no easy answer on this one. If you pay the LL's directly then it's taking responsibility away from the individual and assuming there's nothing mentally wrong with them then that can never be a good thing. People should be left to make their own decisions as much as possible wherever possible. It's a fundamental freedom in our society.

But if you pay them directly and they piss it up the wall or use it for something else then that creates a costly mess for someone else to clear up.

[CogitoErgoSometimes]

I see the author of the article has since been advised to revise the default rate to 'the teens' rather than the higher figure. So that's something. But regarding the 'costly mess for someone else to clear up'... perhaps it's the assumption that someone else will clear up the mess that makes defaulting more rather than less likely?

[MiniTheMinx]

For once I agree with Niceguy

I am wondering if UC will take away some of the stigma of HB so more people could rent privately? or whether the reverse will happen where LL will be less keen on taking on tenants with UC.

Not everyone on UC will be in receipt of money to cover housing, just as some people now receive TC but no HB. How will LL be able to distinguish between these cases, will it mean that everyone on UC will be tarred with the same brush? as feckless innumerates unable to budget.

I thought one of the reasons for paying LL directly was to encourage LL to take on tenants on low incomes because the rent was guaranteed.

[lottiegarbanzo]

Interesting but I do wonder how much this differs from present reality. Unfortunately the larger mess is the impact on other benefit recipients, who will not be accepted by many landlords, though that's already the case.

[lottiegarbanzo]

Good point, how will landlords know. At the moment they know because HB is paid in arrears and many recipients can't pay a deposit. They are always up-front about it IME.

[niceguy2]

Yes Cogito, there is an expectation in some circles that the council will always for whatever reason sort their mess out. Even if the council won't/can't, it will still suck some resources as these people who have spent their money on something else will be complaining.

But my OH was telling me about a client of theirs (she works in the care industry) who has some mild learning disability. He was moving into his own place and received housing benefit. He instantly blew the lot on god knows what. His parents went nuts saying that he shouldn't be allowed to manage his own money, blaming his support worker yet his condition isn't bad enough to say he wasn't capable to manage his own affairs. Besides which his support worker cannot make that decision anyway. So what next? Boot him out? Give him more money!?!?! There's no easy answers.

Then again, I have a friend who has absolutely nothing wrong with her and she'd have no problems dipping into her rent and not pay it to fund a night around town. Our sympathy with the latter group of people would naturally be a lot lower. But if she got booted out, what happens to her kids?

I guess what I'm saying is the world is grey, not black & white.

[niceguy2]

I thought one of the reasons for paying LL directly was to encourage LL to take on tenants on low incomes because the rent was guaranteed.

Unfortunately not. Many LL's have found to their huge cost that council's can claw back HB which have been paid directly to the landlord if it later turns out the tenant was not entitled to it.

So now many LL's are stuck in a dilemma. Do you ask for it directly from the tenant and risk not getting paid? Or get it from the council and risk a large clawback later? That added on top of the fact many insurance companies won't let you rent to anyone on DSS, it doesnt make it easy to let to someone on benefits.

[OddBoots]

Is the main change looked at in this the frequency of payment, the fact it is now monthly rather than 2 weekly?

[Wallison]

MinitheMinx, it is already difficult to rent privately if you're in receipt of TC (without HB) because when the letting agents do their credit checks they also check how much you earn, and a lot of them don't count TC as income. Or maintenance, come to that.

[Wallison]

Anyway, surely the main issue with UC is that many people are going to be worse off under it, regardless of the frequency of payments. It doesn't much matter a damn how often it is paid - if it is less than the benefits that people are getting at the moment then yes they will be more likely to fall into arrears, have problems with debt, be made homeless etc. That to my mind is a much bigger worry.

[CogitoErgoSometimes]

There's no suggestion that anyone received less money Wallison... that's not the point of the article. The main differences highlighted are that recipients got cash monthly rather than weekly and that it went direct to them rather than paid out to the housing association. It's not therefore a numbers problem, it's something different at play that has to do with setting priorities, personal responsibility and money management.

[OddBoots]

Which leads to so many questions for which there will be no one answer. Questions about transition, about capability, about the function of state about education. Even simplifying a system can be complex.

[MiniTheMinx]

Thank you Wallison, I am a bit ignorant of all the finer points. I must do some reading!

Not only is it very worrying but the whole thing is fascinating because LL have always been in the main winners. Private property and rent is a way in which the rich and indeed in recent years the not so rich but speculative home owners have been able to consolidate wealth, save for old age, make money to reinvest or simply top up income. Now, with more and more people in receipt of benefits LL may have to take a hit, isn't the UC/HB element going to be capped? how will this impact upon rental values I wonder and how will it impact therefore on house prices?

Aside from that though, I do know several single mothers, much like niceguy describes who will not put rent at the top of their priorities, traditionally those in social housing, would be re-housed following eviction and these people are going to suffer for their oversight, it will be difficult to distinguish between wanton ignorance and vulnerability Homeless has increased hasn't it by 25% ???? I'm sure it can only get worse.

[CogitoErgoSometimes]

"Aside from that though, I do know several single mothers, much like niceguy describes who will not put rent at the top of their priorities, "

Single mothers are they who have no idea of priorities and a bit thick with money? Very tabloid original ....

[MiniTheMinx]

I know, I know, why lie though. Who are these people that claim benefits and HB? the same people. Many are single mothers. If people lack basic budgeting skills is it their fault, if the lack rational thought and forward palnning? why is that?

[Xenia]

I've never come across a landlord prepared to let to anyone on benefits at all including housing benefit so I doubt UC will have much of an impact. I accept there probably are such landlords around.

There is always this issue of whether you give people all the money and make them budget. I gave my children at university their allowance by standing order weekly so they never ran out of money. On the other hand other parents might say giving it once a term makes the child learn how to budget.

My only hope is UC eventually saves us all a lot of money. In the early stages it does not - IDS has had to get extra not less money for it so if it saves anything it will be in a very long time and the pathetically high new benefits cap of £500 a week when it comes in is not exactly low.