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

(140 Posts)
CogitoErgoSometimes Mon 26-Nov-12 13:58:01

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?

Xenia Tue 27-Nov-12 13:05:55

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.

Wallison Tue 27-Nov-12 14:59:18

^I accept there probably are such landlords around.

There are plenty. A significant portion of the annual £22bn HB bill goes to private landlords.

Still, UC will definitely cost less because fewer people will qualify for it. The ones who won't are the ones on the lowest incomes, but who cares about them?

OutragedAtThePriceOfFreddos Wed 28-Nov-12 14:20:42

If what is suggested in the article is right, and a large proportion of people that have to claim benefits for their housing costs do stop paying their rent, then even more private landlords will refuse to take them as tenants.

This might have the benefit of making many MNers stop complaining that so much tax money is paying of landlords mortgages, but where does it leave the tenants and the landlords?

In theory, it is a good idea to make people budget on a monthly basis to prepare them for working, but landlords shouldn't have to suffer the consequences of their rent not being paid.

Wallison Wed 28-Nov-12 14:34:23

There is already a massive problem with the way that benefits are paid. A lone parent on income support, for example, will get his/her money in dribs and drabs throughout the month - HB, CTC, IS and maintenance if s/he gets it are all paid on different days and calculated in different ways. This, and not poor money management skills, makes it difficult to budget. Paying the UC portion of HB in the way described will just exacerbate this, if it is not calculated pcm. What I mean is that if it's every four weeks like TC, then the person receiving it won't get the full amount of rent in most months.

For example, say someone has a rent of £700pcm. 700 x 12 /52 x 4 = £646. That means that their rent is going to be short by £54 most months, although they will be able to catch up if they get a month with two payments in, but that could take over a year. Given that most people already do not get their full rent covered by HB and presumably won't under UC either as I have seen no headlines about the benefit being more generous than the current system, this is going to be a problem, as money is tight enough anyway, especially for people who are unemployed.

Granted that paying weekly also means there are months where the full rent is not covered, but there are more five-week months so the claimant can 'catch up' a bit more easily.

Wallison Wed 28-Nov-12 14:45:19

Also, the problem with a four-weekly cycle of payment is that it 'slips' each month. What is the use of getting the UC money on the 14th if your rent is due on the 1st? At the moment, with weekly payments, people can budget and set a little money (the HB) aside each week so that they can pay the rent. If all benefits are going to be being paid at once, on a day that doesn't coincide with their biggest outgoing (rent) it would be extremely difficult to budget for.

Like I said, it isn't down to poor money management and it is extremely condescending to say so. People on limited incomes - whether in work or reliant solely on benefits - get by right now by budgeting weekly. It's hard, but most people do it by setting money aside. With one lump sum payment, this will not be possible. Presumably the people that the BBC are talking about have been on in-work or out-of-work benefits before the study was undertaken and were managing their money before. If they suddenly stop being able to manage their money at the same time as the time that the way their benefits are paid to them changed, then surely it is the change that has caused this, rather than their money management skills suddenly going out of kilter for some mysterious reason.

mam29 Wed 28-Nov-12 15:06:50

Never had housing benefit.

we rent privatly through agents.

we would like to move but cost of agency fees, deposit, 2months rent upfront and would want a long term rent in specific area due to kids schools.

We lived here 7years and never been late with rent, rent goes up annually.

We cant get social housing or afford to buy.

My freind with 1child lives in council flat.
she fell behind with rent unsure why -bit odd.
she rang council as is paying arrears back in dribs and drabs

she recently got small inheritance to which I said must be great to start clean slate no debts but she said no she has an arrangement why pay them earlier she spent money on other things.

during uni was once late with rent due to bank error and landlord got well arsey.

I have couple nice landlords too.

so dont know if fact its council shes more relaxed.
Admittidly I wouldent want to live there cant understand why she doesnt do more to move if shes that unhappy.

Im not sure if she gets housing benefit

OutragedAtThePriceOfFreddos Wed 28-Nov-12 15:08:20

Wallison, how on earth do you think most people manage to budget? confused

It is not 'extremely difficult' to budget when your biggest expenses go out at a different time than they go in, it's what everyone who doesn't claim benefits has to do, often on less, or the same amount of money!

noddyholder Wed 28-Nov-12 15:13:46

This is about taking responsibility and not relying on the state to do every little thing. If you are entitled to HB then you are entitled everyone deserves a home but surely if you are receiving the money you can be trusted to pass it on?

mam29 Wed 28-Nov-12 15:38:27

I guess is situation is as bad as op says then no wonder private landlords are concerned.

I think what gets me is social housing is cheaper than market rent.
if they say have rent of £97 a week which freind does 2bed flat and housing benefit covers most of that then surly they very lucky as housings the biggest outgoing.

Most people I know their rent or their mortgage non negociable they make it a priority.

Ours is standing order and we recently manged to get date changed as dh changed jobs with diffrent paydate.

tax credits/cb has option of weekly or 4weekly payment.
dont get tax credits now but cb date changes every month its never same date.

Only social housing has option of paying rent weekly all; privates lets i seen are monthly.

Xenia Wed 28-Nov-12 15:51:23

If we make it hard enough they might get out there and get jobs and claim no housing benefit and no tax credits like so many hard working people. They might even unbelievable as it sounds actually support themselves and their families.

Wallison Wed 28-Nov-12 16:38:38

There are plenty of hard working people who claim HB and TC.

And just how exactly are people supposed to 'get jobs' when there are five unemployed people for every vacancy, in addition to the one in ten people who are working part-time but would like to work full time?

I think the main issue is if it's paid calendar monthly or four-weekly. If it's four-weekly, people will get into difficulties as I outlined above, because in most four-week periods there are monthly outgoings that will just not be covered. At the moment, with different benefits coming in on different days according to different cycles, by budgeting weekly people can get over that. Yes, most of the time there is not 'enough' money but with a bit of juggling around that can be overcome. If everything comes in four-weekly in one lump sum, people will no longer be able to do that. Sure, they'll have one month in say every 10 or so where they get two payments, but by then they'll be evicted.

And I would be very surprised if UC would be paid pcm.

Wallison Wed 28-Nov-12 17:10:15

And mam29 would you prefer to bring up your children on your own and live on a council estate? If not, I don't know what you're bellyaching about.

OutragedAtThePriceOfFreddos Wed 28-Nov-12 17:12:29

Lots of working people have to juggle things at the end of the onto until the next pay day. There is no reason why benefit claimants shouldn't have to do the same.

I don't claim benefits, but I've still had to wait until I've been paid to put petrol in my car, or wait to get grocery shopping. We have even had to ask the gas and electric company to delay taking their direct debit for a week at times when we are really short because something has come up. Where is the big drama in expecting people who get given their money for nothing to do the same?

OutragedAtThePriceOfFreddos Wed 28-Nov-12 17:13:26

Onto should be month! No idea how auto correct worked that one out!

DudeIAmSoFuckingRock Wed 28-Nov-12 17:18:51

"If you pay the LL's directly then it's taking responsibility away from the individual "

i dont really see why this is a problem TBH. (i'm a private tenant and i receive HB into my account BTW) if people are being paid HB to pay their rent then it's going to go to the LL anyway. nobody suggests that the money for free school dinners or prescriptions should be paid to the claimant in order for them to have the responsibility themselves of paying for it. it seems to work fine that they dont ever see that money in their account. why not the same with HB as it is specifically for rent?

MiniTheMinx Wed 28-Nov-12 17:23:30

It was on R4 this morning that there is a rising tide of "underemployed" some 3 million people do not currently either earn enough or have available to them enough hours. The number of people unable to earn enough despite being employed is rising. Employers are either not offering full time or living costs are outstripping earnings (well there's a surprise)

I seriously question where these jobs are going to come from Xenia and Fredo. Ozzy is shrinking the economy with every passing day!

The unemployment numbers are falling but "underemployment" is becoming a huge problem.

I agree with wallison, I used to work for the L.A and we were paid every 4 weeks, once a year we received our salary x two which was great, I saved mine but that is because the salary was more than enough to live on.

The fact is, it is always easy to budget with more rather than less money smile

mam29 social housing is and should remain IMO cheaper than private rent, at least all the time private rent is day light robbery.

OutragedAtThePriceOfFreddos Wed 28-Nov-12 17:24:28

It has been a problem for landlords in the past because they have found themselves with demands from the council to pay back money they have been paid because their tenant has claimed for money they are not entitled to. If the tenant isn't entirely honest about their situation and doesn't notify the right people when they have a change in circumstances, the landlord becomes liable for their tenants debt if they have had the money paid directly to them. Whereas if the tenant receives too much money in HB but pays it to the LL themselves, then they are liable for any overpayments made.

It's really not surprising that landlords don't want to accept applications from people who can't afford to pay for their own housing.

Wallison Wed 28-Nov-12 17:25:17

Yes but the thing with four-weekly benefits is that for most months it just isn't enough - it isn't the full entitlement for a calendar month, yet payments need to be made on a calendar month basis. Also the payment date changes every month. So you might start out with being paid say on the 1st, which is when your rent goes out. So far so good, although you are already 'behind' on what you need for that calendar month. But you switch the heating off for a couple of nights or don't cook at the end of the last week to save on gas, and you get by. The next month your benefit comes through on the 31st, but that's ok because you save it and pay your rent on the 1st. But what about a couple of months down the line when the money comes in on the 20th? Or the 15th? You need to put petrol in the car to get to work. You've already had six months of not getting enough money to get by, and you've cut back as much as you can, even on essentials like food and gas/electricity. You've still got to live for another two weeks and then find rent money on top of that. You're not going to hit a month with two lots of payments for say another four months or so. This is completely different to budgeting on a calendar month basis.

Of course if it's paid per calendar month then that's different, but I haven't been able to find out if it is going to be paid per calendar month or every four weeks.

MiniTheMinx Wed 28-Nov-12 17:31:49

Lets hops it is going to be paid monthly. If they do, I wonder if they will change CB too.

DudeIAmSoFuckingRock Wed 28-Nov-12 17:38:28

if that's the concern then the regulations need to change so that regardless of where the money is paid to the tenant is responsible for paying back teh overpayment. it isn't the LL fault if someone chooses to pay their rent with money they aren't entitled to. it is the tenant who chose to do that and they should be liable to pay it back, either through a debt repayment plan if working or through having it taken back from their other benefits. and as UC is going to be combining all benefits it wont be hard to get the money back of the tenant.

MiniTheMinx Wed 28-Nov-12 17:39:56

I have just had a look at the DWP website, I find this......

smooth the transitions into and out of work, supporting a dynamic labour market

I bet, a dynamic labour market means different things depending upon whether you are a workers or an employer. I don't know whether we want a nation of temps, supported by the tax payer. Is that not more subsidy to businesses???????

DudeIAmSoFuckingRock Wed 28-Nov-12 17:40:04

sorry my last post was in response to outraged.

Wallison Wed 28-Nov-12 17:40:05

I would doubt very much if it's going to be paid calendar monthly - no benefits ever have been, because of the way that entitlements are worked out - eg 'The govt calculates that you need £x to live on each week' etc.

Wallison Wed 28-Nov-12 17:42:56

I agree, Minitheminx. A dynamic labour market means more zero hours/limited hours contracts where an employee is literally at the employer's beck and call and more shifting on and off out-of-work benefits because of this.

MiniTheMinx Wed 28-Nov-12 18:13:53

So this system of UC isn't really about making work pay or getting people back into work or making the transition into work easier for the worker. It isn't even about saving tax payers money confused In fact it seems that it will create a docile workforce and it matters not whether they are in work or out of work.....it only matters that they are responsive to the demands of employers. It seems to endorse short term contracts, minimum wages and minimum hours.

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