Market News

BY  Madeleine Ross

Labour will stop landlords from automatically claiming unpaid rent from benefit claimants, despite warnings that it could drive up evictions.

The Department of Work and Pensions (DWP) will reform rules that currently allow landlords to automatically recoup up to a fifth of rent arrears from benefit claimants’ monthly payments.

The system had been processing tens of thousands of deduction claims each year.

Liz Kendall, the Work and Pensions Secretary said: “I am determined to right the wrongs that have persisted in the benefits system for too long. The automatic approval of landlords’ requests for tenants’ benefits to be deducted is one of these.”

It is expected that the review will also encompass other similar processes, such as those which allow utility companies to recoup water and fuel debt from Universal Credit.

Ms Kendall added: “As well as urgently reviewing this system, I am bringing forward major changes to the health and disability benefits system so that it works for everyone, underpinned by the biggest employment reforms in a generation.

“We will continue to listen to people’s concerns, and transform our benefits system to one of fairness, not punishment.”

Sir Stephen Timms, a Labour MP, added: “The benefits system needs urgent reform and we are taking action across the board to do this – whether that’s tackling the huge accumulation of debt by Carer’s Allowance recipients through no fault of their own, or this automatic deduction of benefits purely at the request of a landlord.”

More than a third of private renters rely on housing benefits and landlords can apply for “managed payments” if they’ve fallen into arrears.

Last month, a judge decided that a “click-screen” process used by the DWP was unlawful, after a tenant who was in dispute with his landlord, Guinness Partnership, over property repairs appealed.

Nathan Roberts argued that it was an “abuse of process” that civil servants had not asked him before docking £500 from his benefits, £460 for rent and £44 for rent arrears.

The DWP said it would not appeal the decision. A previous ruling had found that the department was “in breach of the obligation of fairness” by not checking with tenants before deducting their benefits.

But landlords and housing experts warned that the changes could put more financial pressure on landlords and councils, and could lead to more evictions.

Evictions have reached a record high ahead of Labour’s rental reforms. The bill will ban “no-fault” evictions and make it harder for landlords to increase rents and evict tenants.

More than 1.2 million renters are estimated to be on social housing waiting lists across the country.

As many as 336,366 Londoners are on housing lists, the highest figure in more than a decade, analysis of government data by cross-party group London Councils found. The City of London has warned of a homelessness emergency, with an acute shortage of affordable homes as a key factor.

Michelle Lawson, of mortgage broker Lawson Financial, said: “Landlords are being attacked enough and quite simply, if the rent is not paid it pushes the landlord into financial difficulty.

“Landlords cannot continue to absorb the results of poor government policy without listening to the people on the ground. They have been told and warned enough times now.”