Millions of people who rely on housing benefits could face eviction later this year thanks to benefit reforms.
The government is making changes which mean that all benefits will be rolled into one universal credit (UC) which includes housing benefits and is all paid directly to the recipient. The government wants claimants to manage their own budgets. From October, the benefit will be paid directly to the tenant instead of the landlord (as it currently is now}.
The Department for Work and Pension’s Welfare Reform will see the money go directly to the claimant once a month, allowing them to budget accordingly and take responsibility for their rent payments. Despite the push for tenant responsibility, even renters on housing benefit said they would struggle to manage their money as they attempt to juggle food and other day-to-day costs alongside rent.
Many landlords are worried about actually getting paid as a result and the National Housing Federation (NHF) believes that rent arrears will increase by a £245 million year because of the regulation change.
National Housing Federation Chief Executive David Orr says: “Within a few short months, hundreds of thousands of low-income families will see their housing benefit cut as a result of the Welfare Reform Act. Many could fall behind on their rents, putting at risk the roof over their heads.”
A survey by the federation, which represents housing associations and some of Britain’s biggest landlords, suggested that arrears will rocket by over 50%. A further 15% of housing associations think that their rent arrears could double because of the reform and over half (57%) are worried that their tenants know hardly anything or nothing at all about the benefit changes.
The reform is likely to affect some of Britain’s poorest and most vulnerable people who currently rely on benefits for financial support. The government believes the reform will allow tenants to become financially responsible, however, Mr Orr argues they will be worse off.
“In these difficult times, the best way to help residents manage their finances is to allow them to continue having their support for housing costs paid direct to their landlord. Otherwise we are in danger of seeing rises in homelessness and families really struggling to make ends meet.” he continued.
“Housing associations are doing their best in tough circumstances to cushion the blow for their residents. But there is still a lot of uncertainty, including in Government, as to the full impact of its reforms. We need more time to understand and prepare for the impact of these massive changes to the welfare system.”
Work and Pensions Minister Steve Webb said: “Where people are in work or renting privately they have to budget out of the money they have coming in to pay their rent.
He believes that argues the benefit reform will help ease people back into work by learning budgeting skills, adding:
“We’re extending that principle, treating social tenants the same, so that they learn the same budgeting skills and if they move into work it’s not a great shock.
“We recognise a minority will struggle to budget, and they will need special support, but the norm will be that people have an income coming in and they budget out of it. That will be the normal thing to do.”
Further research from the NHF shows that almost one third of working age social tenants in Britain, which is around one million people, will need extra support to help manage their budgets when their housing benefit is no longer paid directly to landlords.
If people on benefits fail to manage their budget, they could face falling behind with their rent and being evicted. If the very vulnerable fall into extreme debt they could be evicted and ultimately left homeless.
It’s not just those in social housing who face living cost pressures. New figures from Monday Advice Trust, the debt charity, show that council tax arrears are the one of the most major concerns for people with existing debt.
The charity has seen a massive 40% increase in calls for help with council tax arrears in the last year. The organisation estimates this rise is largely down to local authorities increasingly using bailiffs to collect debts which are owed.
Joanna Elson, Chief Executive of the Money Advice Trust, said: “Appointing bailiffs to collect debts all too often benefits no one but the bailiff. The evidence is clear: bailiffs can cause severe financial and psychological distress. We have heard from many thousands of people who have been subjected to poor bailiff practices, some for debts as little as a £50 parking penalty charge, that have resulted in serious financial difficulty.”