From 2013 Housing Benefit will be replaced by Universal Credit. Landlords are very concerned that the rental element will be paid direct to the tenant rather than to the landlord. They are worried that tenants will use it for other expenditure and fall into rent arrears that could eventually see them homeless. Many of our landlord insurance cover clients depend upon a steady and regular income stream to pay their mortgages each month and cannot afford to allow arrears to build up. Landlords believe that many tenants would rather have the rental element paid directly to their landlord and some do not even have bank accounts.
There is a shortage of affordable housing and many commentators believe that the new regime is dissuading landlords from entering the local authority market and influencing existing landlords to withdraw from it. The most controversial aspect of the new Universal Credit has been the decision to cap the rent element to prevent tenants from renting more expensive homes. This is already believed to have had an impact on many existing and prospective tenants.
Many landlords are criticizing the government for failing to take the opportunity to encourage more investment by private landlords in the social housing area. Some landlords are unhappy that the tax system treats rental income as if it was investment income rather than the income from a trade or business and therefore eligible for a range of allowances. Others point out that a small change like allowing rents to be paid direct to landlords could have a large impact on the availability of rented housing