With Rightmove and Zoopla recently announcing an end to ‘No DSS’ listings on their portals, and a recent meeting held by Heather Wheeler, Housing Minister at Downing Street along with several representatives from leading property portals and industry bodies to discuss the ending of discrimination against Housing Benefit tenants in privately rented properties, means things are a'changing in the private rental industry (ah, we'd started to get bored there with a good ten days without any changes!). Since the meeting, Metro bank has announced amendments to mortgage rules which currently prevent landlords renting to tenants on housing support. The announcement on the 11th June is the latest pledge from the industry to end potentially discriminatory practices which deny good quality accommodation to those on benefits.
I spent some time recently discussing this with CGT staff member Olivia Turley, our Client Accounts arrears chaser and person who works closely with local councils for our tenants who have moved onto benefits mid-tenancy. We discussed how banks and local councils can assist with ensuring more landlords and letting agents can relax their rules on this in the future.
We came up with a few key ideas;
1. ALL mortgage lenders to relax rules around accepting ‘no DSS’ tenants on buy-to-let mortgages.
interestingly, we have already seen some changes with this and there are now many more mortgage lenders accepting ‘No DSS’ tenants when lending on buy-to-let mortgages although some are subject to stipulations such as having an airtight AST agreement in place. However, this is still not cross market, and there are still some big-name lenders clearly stating they will not lend to landlords with housing benefit tenants. If all banks and lenders could get on-board with this, it would show landlords that where the banks are willing to take the risk first, then landlords can too.
2. Speed up Universal credit application times
With the gradual phasing in of Universal Credit across the country, the waiting times for applications to be approved has been all over the news and we would estimate its still easily 8+ weeks for a tenant to receive any housing income, this means landlords with mortgages to pay and property outgoings are being severely left out of pocket during this period. This obviously becomes unappealing to the average private landlord and puts them off accepting applicants who receive housing support in the future. There have also been difficulties with getting these applications to Universal Credit through where previously Housing Benefit had been paid with no issue. CGT previously had an Eastern European tenant who had lived in the UK for 40 years and was receiving housing benefit but when told he had to change to Universal credit he filled out the form and they responded to say he was not entitled. With the help of Citizens Advice Bureau, 16 weeks later they have finally accepted his claim…if we could speed up this process then more landlords may look on this favourably as unlike a tenant that could lose their job, once agreed the housing benefit or allowance from Universal Credit is guaranteed.
3. More education from local councils and schools/colleges for adults and teenagers on managing finances and the importance in rent being the first thing to be paid first.
Its evident that a lot of tenants get into debt initially with arrears when they are unable to manage their finances. This is due to a lack of understanding of budgeting but also of the importance of what needs to be paid above everything else. This is the same with tenants who receive housing support and we feel that more education could be given to these tenants by the council when they start receiving housing support but also way before this, in schools and colleges with young adults about the importance of managing your finances. At the moment for example, its usual to see a spike in arrears around Christmas as some tenants seem to decide to spend what would normally be their rent on presents and socialising, not understanding that falling behind in their rent could leave them without a roof over their head.
We feel education such as this should really be included in the curriculum for 16-18-year olds and should make up at least 50 % of their PSHE lessons. These teenagers are taught how to write a CV but not how to set up bills, standing orders and what to do should you find yourself in debt. You wouldn’t believe the number of grown adults that we have to explain the difference between a Direct Debit and a standing order on an almost daily basis.
4. More recourse if a tenant who has universal credit paid directly paid to them doesn’t pass on the rent part to their agent/landlord
If a tenant doesn’t pay their housing allowance to their landlord/letting agent there is no recourse until it gets to 8 weeks when a letting agent can make a claim directly to Universal Credit. However, by the time the claim goes through and the paperwork is completed, this can often then be 12 weeks leaving the landlord without rent for this time. If there could be a process of us being able to contact Universal Credit or Housing Benefit to tell them early on that the tenant is in arrears, they could then reach out to the tenants to offer them support and guidance about how to get back on track quickly. At the moment, if one of our tenants falls into arrears, we encourage them to speak to us so we can offer some information on the free services that are available such as Citizens Advice Bureau, Step change and we have the fantastic Green Square housing support in Gloucester (who deal with universal credit daily). We also advise them to visit the job centre or council and we can provide proof of their arrears in order to help progress any claim along as quickly as possible. It’s the tenants that bury their heads in the sand and do not respond to our attempts to contact that sadly often end up losing their homes. Just like the initial claim, speeding up the process of getting the tenant back on track when there is arrears will help appeal to private landlords.
So there we have just a few ideas on some ways banks, local councils and letting agents can work together to lower the concerns that some landlords have with renting to those tenants in receipt of housing support and go towards helping the housing crisis that we see happening in the UK at the moment.
If you have any questions, please get in contact.
Angharad Trueman and Oliva Turley
CGT Lettings Ltd