Tenants could 'struggle to adjust' to monthly benefit payment, says Winckworth Sherwood
Nikki Lynds-Xavier, a partner in Winckworth Sherwood’s housing department, has expressed the firm’s concerns over a major shake-up of the benefits system in the UK that will see several benefits and tax credits — including housing benefits — merged into the universal credit, which is paid monthly.
The firm is concerned that a move to one monthly payment — which is beginning this week as a pilot scheme in Ashton-under-Lyne in Greater Manchester — will see a significant increase in rent arrears as tenants in social housing struggle to adjust.
Lynds-Xavier said: ‘A pilot involving some 2,000 tenants in the London Borough of Southwark that concluded earlier this year has shown some worrying indications. Tenants who started the pilot with no rent arrears found themselves on average £180 in debt at the end of the pilot.’
The pilot involved 1,500 local authority tenants and 500 tenants of housing association Family Mosaic.
The pilot found:
- Only 60 per cent of tenants successfully moved onto the pilot, with 40 per cent failing to successfully manage their monthly budgets
- 11 per cent refused or were unable to engage with the local authority
- 14 per cent were later deemed too vulnerable to take part
- That there was a lack of understanding about personal finance among tenants, with others unable to open a bank account
Lynds-Xavier said: ‘These findings are worrying for housing associations. Further small-scale pilots have shown that under the new benefits system, housing officers have to make upwards of 40 visits in each case when chasing rent arrears, compared with six under the current system. This adds an enormous administrative burden and cost for those providing social housing.’
She continued: ‘Social housing providers are being encouraged to move to a maximum recovery stance after the move to direct payments and this is undoubtedly going to lead to greater conflict between tenants and providers and a likely increase in evictions.’
News from Winckworth Sherwood
News from The Lawyer
Briefings from Winckworth Sherwood
This decision represents a welcome return to the ‘pay for what you use’ principle and strikes a fairer balance between different creditor and expense groups.
Winckworth Sherwood has provided a summary of the Trusts (Capital and Income) Act 2013.