16:42 PM, 30th December 2012, About 12 years ago 79
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In the West Midlands we are addressing the issue of educating the young to understand their future housing options, financial obligations and choices. I work on behalf of NLA with a consortium called HOMESTAMP (www.homestamp.com) and we are just coming to the end of a major project to get a module into the national curriculum for 14-16 year olds. Under the subject of Financial Management this module will help to break the cycle for many young people to prevent them becoming the 4th generation of their family to base their lifestyle on “benefits will provide”. This will be a reality check for those who may believe that becoming pregnant will ensure them a “nice little flat off the council”.
All local authorities are becoming more and more reliant on the Professional Rental Sector (PRS) to help them to house their homeless and it is vital that young people are aware that their only future options will be to stay at home, provide their own homes (by renting or buying) or to convince a private landlord that they will be a good tenant. By the time these young people leave education the Universal credit will be in place and there are serious concerns that giving people a “purse of money” will further increase rent arrears, not only for the PRS, but also for local authorities and Registered Social Landlord’s (RSL). The utility companies will also become victims of those who choose to misuse the money provided to them, from our tax pounds, to keep them safe.
We all learn from what we absorb and young people who are brought up in families where no one gets up in the morning and dashes off to work become accustomed to this life style for them it becomes the norm. It will take some time to re-educate these youngsters that there is another way of living and that the alternative may, in future, be their only option. We need to appeal to the innate desire of each new generation to rebel against the lifestyle of their parents. No one wants to live in a society where we don’t care for those who need our help and financial support but it is in meeting the needs of the needy that we also fall victims to the greedy. I am well aware that it is becoming increasingly difficult to find work and that withdrawing or reducing benefits alone is not the answer but we must start with motivation, because it is only motivation that will break the cycle. We need to get to the point where young people leave education “knowing” that the next step is to find a way to fund the life that they plan.
Schools need to play a major role in making these youngsters aware of the life that they could have rather than allowing them to become myopic about their future. Parents also need to play a part. Those of us who do work often allow our offspring to open an account at the bank of mum and dad and, while this may be necessary during the years that they are in education, we need to close their accounts one month after they leave education and motivate them to become self supporting and to gain the dignity that comes from paying your own way. It is selfish of us to want to give our kids what we did not have because in doing so we take away from them one important thing that we did have, MOTIVATION. I consider myself fortunate that my parents could not afford to allow me to remain unemployed, I grew up knowing how hard my parents worked to fund our simple lifestyle and I could not wait to earn my own money. I knew what I wanted, I also knew that the only way that I would get that I wanted was to work.
As a tax payer, I welcome the Governments plans to gradually reduce the “dependence” mentality of many people in this country. As a landlord, I do fear that some of these plans may impact on my own income. All landlords are only one redundancy away from a tenant who is on benefits and we all need to position ourselves to ensure that whatever else comes out of that “purse” of universal credit our rent comes out first. ALL Assured Shorthold Tenancy’s (AST) should carry a clear clause that the tenancy is only granted on the basis that if now or at any time in future the tenant needs to claim benefits to help to pay all or part of the rent that rent is paid directly to the landlord. Under new Government guidance issued this year, local authorities should pay the rent directly to the landlord who only grant tenancies based on direct payment, as part of their safeguarding policy. Local authorities were given discretion on this, unfortunately, and it is up to the PRS to ensure that this discretion is exercised in our favour. Landlords should attend all local authorities landlords fora and landlord meetings and be very vocal about the fact that we will not be become part of the welfare state, we will not pay into a system that gives people financial support without protecting our tax pounds by ensuring that the money given is used to keep a roof over the claimants head. We will be taking legal eviction action and pursuing our rent arrears and we will refuse to house those who we fear will not pay for the service that we provide. All these authorities are only too well aware that without the PRS they are in BIG trouble, the day has arrived when they need us more than we need them and it is time that we set out clearly our terms of business.
You will often hear the term “financial inclusion”, what does that mean? It means that no one should be excluded from society because they have a lack of money and I absolutely agree with that. But there are accepted norms in our society and among them is the implicit understanding that goods and services must be paid for. Most of us arrange our finances so that the bills are paid before we spend on other, less important things. Most people use a system of standing orders and direct debits to avoid the temptation to put our desires before our obligations. Financial inclusion in our society means helping those who do not have the skills to manage their finances to follow these “norms”. Many people have poor financial histories and cannot gain access to the high street banks but Credit Unions will take these customers and most will “ring fence” their rent payments if landlords work with them. They will also send a landlord written notification if the tenant exercises his right to stop a standing order and, because they require one months notice to do this, the landlord has time to take appropriate action. The landlord will also get written notification if a tenant tell the Credit Union to change his rent payments from you to another landlord and again this is early warning that a tenant may have abandoned the property. Abandonment is fraught with potholes for unsuspecting landlords. Some landlords use what are known as “abandonment notices” on the door of the property but these notices have no legal status and will not protect a landlord against accusations of illegal eviction and the horrifying penalties that may follow a successful conviction. A tenant who has given a Credit Union the required written notification to change the recipient of their rent payments has committed himself in writing to the fact that he has changed his prime residence and the written notification that the Credit Union will send to the landlord may be just the document you need to cover your back.
The PRS must survive because without us we will have “cardboard Cities” all over this country. I believe that the Universal Credit will bring us closer to the day when Government have to face the fact that
Landlords are running a business, a business which is vital to the future of this country and the well being of those who live here. Landlords need to be paid for their services just like any other business. Without homes, people will sink into further dependence and put pressure on the Health Service, the Legal System and society in general. The UK will not be a place where people want to make a life and bring up their children. We will not hang onto the many talented young people who are the future of this country. We will become a country of lawlessness, worklessness and hopelessness.
This article was first published on 15th December 2011 and has been re-published on 30th December 2012 following recent media reports of a survey carried out by Housing Charity “Crisis” which indicates that only 1.5% of Private Landlords now rent to tenants claiming benefits.
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Chris Best
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Sign Up1:07 AM, 2nd January 2013, About 12 years ago
While I understand the ire of landlords at tenants who don't pay rent (I've just had one do a runner owing rent and a lot of other debts) I don't agree that non-payment of rent should be criminalised. The tenant enters into a civil contract with the landlord whereby the landlord provides a service (accommodation) and the tenant agrees to pay for that service. If the tenant ceases to pay for the service, then if this was a normal civil contract then the landlord would be able to treat the contract as terminated and the tenant would have to leave the accommodation and the landlord would be able to recover losses through the civil courts. (The difference with the Tesco analogy is that the thief has no intention of entering into a contract, = no contract = criminal offence). Since tenants pay rent in advance, some money is always paid up front so there is always a contract. The Tesco analogy only really works if squatting occurs. That, at its most basic level, is theft because it is taking a benefit (the accommodation) with the initial intent to avoid paying for it.
The problem is that the various Housing Acts, and court precedent before them, has created a body of law that treats contracts for housing quite differently from other contracts, because of the sensitivity of housing as a basic human right (whatever that may be), leaving the landlord in a far worse position regarding reclaiming losses than in almost any other type of contract.
What we need is a radical review of housing law that prevents the tenant who does not pay rent from dragging out the process for such a long time at the expense of the landlord.
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Sign Up3:07 AM, 2nd January 2013, About 12 years ago
Absolutely agree with your contention that housing law needs amending to prevent a tenant dragging out the eviction process,
However your correct assessment of the law treating housing as a sensitive matter is of NO interest to a LL.
Your contention exposes in law a belief that a LL can afford to allow a tenant to use the legal system to use a service for FREE before being eventually evicted.
Housing is a sensitive issue for the LL; if he isn't paid rent he could end up homeless himself.
Why should a LL be exposed to such a risk because of the sensitive nature of a tenants housing issues.
In short why should a LL face homelessness rather than the tenant who has chosen NOT to pay rent to that LL!!!???
This situation is a very real and present risk and has been confirmed as actually happened by M Alexander.
Why does the law think that LL should or can afford the lengthy legal processes it takes to get rid of a tenant who chooses NOT to pay rent.
No other service provider has to maintain a service for nothing and yet that is what LL are expected to do; because of sensitivity!!!!
Well what about the sensitivity of a LL facing bankruptcy and possible homelessness caused by the non-rent paying tenant!!!??
I am not that bothered as to whether non-rent payment is criminalised or not!
Most LL just want their properties back as soon as the tenant decides NOT to pay the next months rent.
So if they pay rent in advance they have the property up til; the last day of that month they have paid for.
They should leave no later than 24 hrs of that day.
Mark Alexander - Founder of Property118
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Sign Up7:01 AM, 2nd January 2013, About 12 years ago
Chris, it is very difficult to argue against that logic. Clearly you are a very wise person and we welcome your contributions. Thank you.
Would you agree that spending housing benefits on anything other than rent should be treated as fraud?
Mark Alexander - Founder of Property118
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Sign Up7:22 AM, 2nd January 2013, About 12 years ago
Paul, the landlord chooses whether enter into a contract to give posession of property to a tenant. Chris has persuaded me of that. Following on from that line of thought, it is right that the risks are commercial. As landlords we can insure insurable risks, eg with RGI. Therefore, Chris is right. We should not deal with none payment of rent as theft, we should insure against the risks, accept the risks or say no. We should, however, be fighting for faster possession and for misappropriation of benefits intended for housing to be criminalised.
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Sign Up9:38 AM, 2nd January 2013, About 12 years ago
Yep I am not that fussed about whether non-rent payment would be criminalised or not.
I am OK with it being a breach of a civil contract.
If I hired a mobile home (Winnebago style) to live in and refused to return it; that I believe is regarded as theft if I do not pay the ongoing hire costs
Note I have entered into a civil contract.
Preventing the hirer from recovering the home because I am living in it would surely be theft.
I don't see much difference between living accommodation that does not move to a mobile form of accommodation!
They could both be considered a PPR!
However ALL this is pure semantics; it doesn't really matter what we think!
The law as per AST's gives tenants certain rights which we are NOT going to change anytime soon, despite our LL wish that it would.
I therefore in total agreement that the only practical way we as LL have of combating the scourge of non-rent paying tenant, is indeed an insurance solution.
There are now quite a few different options, which I believe you have mentioned in disparate posts.
It would be helpful for LL who use LA and those who don't to have an overall view of products that might be considered appropriate in these challenging times to combat non-rent payment, or rather to replace rent with insurance rent when a tenant fails to pay the rent!!
Clearly if LL are forced down this RGI route because of the problems of timely eviction; there will be a restricted market for those LL who cannot afford to take a risk on a tenant who cannot pass an RGI check.
Of course those LL who have spare cash or other credit lines and that don't mind taking a risk because they are expert at DD, is not a problem for them, which is fine.
I would conjecture that the vast majority of small LL in the UK are of the Mom and Pop variety!!
They are extremely unlikely to have such spare resources and would therefore depend on RGI.
I believe very few of these smaller LL are even aware of the efficacy of RGI type policies, and that if they were the complexion of the rental market would rapidly change, to effectively refusing to take on HB claimants at the outset of a tenancy.
At the moment these LL are running on a wing and a prayer regarding timely rental payments and are oblivious as to the possibility of RGI!!
If more smaller LL were aware of these issues I reckon the withdrawal by LL form the HB market would increase even further.
You would then have all the housing charities and councils like Newham moaning that there were no affordable HB properties available, when you and I would both know that all that would have happened is more LL have withdrawn from the HB market.
There could even be an effect on HB type property prices, irrespective of any yield differential in favour of the HB tenant.
It doesn't long for one non-rent paying tenant to wipe out ALL the yield advantage of the HB tenant.
This will be the case even more with the advent of UC!
I agree with fighting for faster possession processes; but I am sure for you who have been in this game a lot longer then me are as equally cynical as to any change that might take place regarding faster repossession.
I think your pragmatic and realistic response of an insurance solution being all we have realistically got is the way to go.
Too few LL are aware of these insurance possibilities and this is causing quite a few of them massive financial detriment, which could well have been prevented by purchase of a timely and appropriate insurance solution.
Be interesting to see how well an article in total by you would be picked up by SE
I reckon you might find a lot of LL traffic coming to the site just because of that article.
There are apparently 2.1 million tenants in rent arrears presently.
Surely LL might be searching round for a solution!!??
Chris Best
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Sign Up3:36 AM, 3rd January 2013, About 12 years ago
Thanks Mark. I do sometimes wonder whether a wise person would be a landlord in these times! I like the fraud argument, you might get away with that one but you would have to establish that the housing benefit was obtained under false pretences, i.e that there was no intention of paying rent at the time that the claim was made - which takes you back to the intention of the parties at the time that the original lease was signed and the first rental payment made.
I do also agree with Paul that the law does unfairly penalise landlords - that is the market we have all entered into, and we do take the risk on the voids and the condition of the property on return. Insurance is I think a useful way of capping your risk - I have it on my properties - although you still take the risk on the excess, usually one month's rental.
What this means however is that the landlord pays more, reducing their margin, without the ability to claim this back from the tenant as our rents are governed essentially by property prices.
One solution would be for the state, if it wished to protect defaulting tenants from being made homeless, to compensate the landlord for the loss of rent during the eviction process. Effectively this would mean that the housing benefit should be paid directly to the landlord once it was established that 1) the tenant was not paying the rent; and 2) the landlord was seeking vacant possession and 3) the tenant had nowhere else to go in the short term. This would be better than the current struggle to get local authorities to pay housing benefit direct to the landlord, and would relieve the pressure on both landlord and tenant. The council would then be taking the financial burden of any delays to the eviction process.
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Sign Up13:46 PM, 12th January 2013, About 12 years ago
are you saying here that we are backing the wrong horse ?
do we now change tack and go for a different E-petition ?
or do we use this one as a way to open a door, to create a discussion, a starting point ? because I don't thing that is going to wash. I would have thought with an E-petition, what you ask for is the only item on the table. There is no
"lets talk about something else" once you've got their attention.
Mary Latham
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Sign Up14:54 PM, 12th January 2013, About 12 years ago
Chris I agree that the case for fraud would be difficult because of the probems of proving intent at the time of claim. I do think, though, that when a tenant has done this multiple times "intent" could be established based on previous behaviour - would you agree?
I was once at a local landlords meeting where a discussion began about tenants who had not paid LHA to the landlord - during the discussion we established that the same tenant had done this to 6 of these landlords - 6 in the same room and I could only imagine how many more! Through networking and website landlords are now sharing more information about these tenants - it would be very interesting to see a test case where several landlords were claiming fraud and using the argument that the tenant had constantly claimed LHA without paying rent. I wonder if, as tax payers, landlords would have the legal right to take this action?
What makes me cross is the fact that local authorities, through their Housng Benefit records, know when tenants are constantly defaulting on rent despite being given your tax pounds and mine to pay for it. They could easily make a case for "intent" but they don't do it because it is the landlord who takes the loss. Surely they have a legal obligation to protect public funds? Surely the fact that tenants are not using public funds to keep a roof over their heads would enable them to stop allowing their claims? Govenment are attempting to control the public spend on housing through the Localism Act, in my opinion, they have missed an opportunity to stop public funds being used to put pressure on the NHS and the legal system by not saying that once a tenant has been found to be hanging on to the LHA future claims will be refused. Many landlords have had tenants who have used the LHA to fund drinking and drug habits and this feels like a double whammy for tax payers.
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Sign Up21:31 PM, 12th January 2013, About 12 years ago
For whatever reason it appears that even though LHA is granted on the basis of the LHA applicant providing an AST to facilitate provision of LHA; that there is NO obligation for the tenant to pass that funding to the LL.
I agree that seems to be a prima facie case of obtaining monies by deception.
It seems that the council consider they have discharged their responsibiltes visa vie once they have processed the claim.
Whether those resources go to the LL is only of interest to them once 2 months of non-LHA payment have occurred.
They are NOT concerned that the LL effectively loses 2 months of rental income.
I therefore feel that attempting to have non-rent payment criminalised whether by private means or council LHA is the wrong way to go.
It is not so much the fact that tenants don't pay rent; it is the fact that once that occurs and continues to be the case a LL has to go through an onerous and lengthy CIVIL court process.
Whilst this should be a quick process; in practice we ALL know it isn't!
It is really only this particular failing that most LL have an issue with.
I don't think it is unreasonable to require a tenant to leave; if the LL so chooses; once the tenant, for whatever reason has failed to pay rent for the service a LL has provided.
It is of no matter that the property happens to be the PPR of the tenant.
You should NOT have the opportunity to live in a rental property rent free until a LL has managed to evict you.
I would suggest,; like in the USA, that once you are 1 month in rental arrears you can, if the LL so wishes be removed by the police for rent non-payment..
Of course the problem here is some LL may make a vexatious claim against a tenant for non-rent payment to get rid of the tenant.
This could easily be prevented by financial sanctions against the LL.
I would suggest 6 months of rent as compensation to a tenant plus loss of deposit.
Tenants would rightly insist on a receipted method of rent payment to validate the fact that they had paid the rent.
Electronic transfer systems are useful hers as there is an audit trail which a LL could not argue with.
I think there would a good case for a LL facing criminal sanctions if he ever claimed non-rent payment which turned out NOT to be the case, as the reason to quickly evict the tenant.
LL would err on the side of caution before committing themselves to tenant removal by police.
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