For many years now, rising rents have put enormous pressure on those in the rental market. This has increased their vulnerability, not only because landlords are more likely to cherry-pick tenants who can afford the highest rents, but also because of a shortage of social housing.
This has been compounded by the increase in Universal Credit claimants during the COVID-19 pandemic, which has seen the number of claimants double from 3 million in March 2020 6 million in March 2021.
As we have said before, the Private Rented Sector (PRS) plays a significant role in supporting the social housing sector, which has been unable to keep up with demand, as well as preventing homelessness. However, various surveys have found that PRS landlords are increasingly unwilling to rent to households in receipt of housing benefits or Universal Credit. Increased taxation and legislation of landlords, as well as planned restrictions in the possession process, are largely blamed for exacerbating the issue, but this report also find that perception over UC and receiving regular payments is a significant factor.
Now, an online study of over 2,700 landlords across England and Wales has taken a more in-depth look at landlords’ views and what would encourage landlords to rent to tenants on housing benefit or UC. The final report (which can be found here) has been written by the Centre for Homelessness Impact, the Behavioural Insights Team and the National Residential Landlords Association.
On the whole, the study found that rent guarantees and/or upfront cash payments of £1000 from local authorities would significantly increase landlords’ openness to renting to people in receipt of benefits. However, the incentives are more effective when the gap between market rent and local housing allowance (LHA) is smaller emphasising the importance of keeping LHA in line with market rents.
The offer of budget planners and pre-tenancy training appeared to be less effective at changing landlords’ attitudes. However, where landlords were offered a written guarantee that a Local Authority would cover late or unpaid rent, landlords were more susceptible.
It is clear that the government needs to engage with landlords more effectively and address their perceived risks of renting to tenants on UC or housing benefits. Whilst it is clear that financial incentives are the most effective, they still don’t significantly alter landlords’ willingness to rent to the social sector. A lack of understanding of why tenants are on Universal Credit (perhaps assuming that person is unemployed), perceived risk of late or missed payments, damage to their property and lack of communication are also key barriers.
In our experience, landlords have lost confidence in the system and their ability to remain in control of their own investment. Guaranteeing continued payments, linking local housing allowance to market rents and improving the Universal Credit system for landlords are just some of the initial steps that we believe need to be taken. FULL REPORT HERE