Second Reading

Part of Welfare Reform and Work Bill – in the House of Lords at 6:39 pm on 17th November 2015.

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Photo of Earl Cathcart Earl Cathcart Conservative 6:39 pm, 17th November 2015

My Lords, this is the first time I have spoken in a welfare Bill. What caught my eye was the clause on social housing rents, under which the social housing sector, which provides affordable housing, must reduce rents by 1% a year for four years. My initial response was that it might cause some controversy, but I see that the social housing sector has increased its rents by 20% since 2010, which is more than double any increase in the private landlord sector. As a private landlord, I do not see how the social housing sector managed to get away with that. It is unfair on its tenants and, indeed, the taxpayer, who has to pick up the tab for these increases—so much for affordable housing. I support this measure.

Private sector landlords play an increasingly important role in the rented housing market. The number of properties rented by private landlords has doubled in the past 10 years and they now account for 4.2 million properties for rent, more than half the total rental stock. Private sector landlords also play an increasingly important role in housing those in receipt of benefits. According to Department for Work and Pensions statistics, as of August, around 32% of all housing benefit claimants lived in private rented accommodation.

As the market tightens due to increased demand, it is important to encourage and support landlords to house those in receipt of universal credit so that they are able to access accommodation, otherwise they will find themselves at the back of the queue. It is vital that landlords have full confidence that they will be paid in full and on time if vulnerable tenants are to have access to the rented homes they need. This is especially important since the Government took away the option for tenants to ask that the housing element of universal credit be paid directly to the landlord, as was formerly allowed under housing benefit, even though many tenants want to do this. In October 2012, a survey of more than 1,000 landlords carried out by the Residential Landlords Association and the Scottish Association of Landlords found that more than 91% of landlords were less likely to rent to tenants on benefits as a result of the decision not automatically to make payment of the benefit direct to the landlord, even when a tenant reaches eight weeks’ worth of rent arrears. It would be good if the Government brought forward an amendment allowing the housing element of universal credit to be paid directly to the landlord. That is my first point.

There are two other measures that should be included in the Bill to assist with giving landlords the confidence they need. The first is that landlords need information on payment of universal credit. Landlords need assurances that tenants have the funds available to pay their rent. Without these, renting to them becomes a risky proposition. Currently, private landlords have no information about the level of payment of universal credit to tenants or about when it will be paid. To provide confidence to a landlord, tenants should be allowed to give their consent to their landlord accessing a limited amount of information to confirm that a universal credit claim has been made and to check the status of that claim. I understand that social landlords are able to gain such information, so why not private landlords? For tenants in work, landlords always ask for a reference from employers to establish their income to ensure that funds are available to cover the rent. It must surely be common sense for landlords to be able to do likewise for those in receipt of housing benefit. I hope that in Committee the Government will bring forward an amendment that will ensure that there is a clear legal power, where the tenant provides written consent, for the Department for Work and Pensions to disclose to a landlord information on the housing element of a tenant’s universal credit claim, including the amount and when it is paid.

My last point concerns universal credit claimants’ rent arrears. As benefit claimants may often move home, including to seek work, landlords need the security of knowing that tenants in receipt of universal credit cannot simply stop paying their rent and leave their property. Currently, rent arrears can be recouped where a benefit claimant is still living in the house to which the arrears apply. There is, however, little or no opportunity for landlords to recoup them when such tenants move house unless they are prepared to go through a lengthy and probably costly court process. It is important that measures are put in place to give landlords more confidence that they will not be left facing rent arrears. Knowing that the landlord could recover rent arrears from an ongoing universal credit claim, even after a tenant has left the property, would be a strong disincentive for a tenant to rack up arrears in the first place. I hope the Minister will bring forward a measure in the Bill that will ensure that rent arrears follow a tenant in receipt of universal credit, and that landlords affected have a clear route to reclaim the lost rent in such circumstances. I hope the Minister will look favourably on my three points, but I shall not hold my breath.