RLA : RPI : Pathfinders already losing their way

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Pathfinders already losing their way - February / March 2004

A new approach to housing benefit now being tested in nine pathfinder areas is designed to bring greater fairness into the system. But experienced landlords believe it could also lead to increased homelessness

Private residential landlords and charities for the homeless are united in their disapproval of radical changes to the way housing benefit is paid that are being tried in nine pathfinder councils.

As outlined in Building choice and responsibility: a radical agenda for housing benefit, the changes include introduction of flat rate allowances set locally by housing officers and paid directly to tenants. The rate, which is supposed to reflect local rents for the type of property deemed suitable, applies regardless of the rent actually paid it being left to tenants to shop around for the best deal and either make up the difference should they require more expensive accommodation, or pocket any saving made by moving into less expensive housing.

Blackpool council was the first pathfinder to start testing the new system, followed by Lewisham in December. Coventry and Teignbridge councils in January, and Brighton and Hove, Edinburgh, North East Lincolnshire, Conwy and Leeds councils, all starting in February.

Lee Dribben, chairman of the RLA's Blackpool Branch, says 'millions' of snags with the new 'local housing allowance' were immediately identified; many of them anticipated by the protestors. The main problem is that most of the money will now be sent directly to tenants, relying on them to pay their landlords. 'Councils have the discretion to pay directly to landlords if they think there could be difficulties but there have been few excep tions', says Dribben.

The flat rates payable are being set by local rent officers based on broad rental market areas (BRMAs), and also taking into account the number of people in the household. As individual property conditions are no longer part of the equation, this should speed up assessment which has been notoriously slow in many local authorities. That this is not much consolation if tenants fail to pass on the money, Dribben points out. Late is better than never.

'One obvious problem was that the first payments went out in December. So tenants who normally received £55 a week job seeker's allowance were able to pocket £150 for a fortnight's rent. With Christmas looming, it was hardly surprising they found a myriad of excuses for not paying their landlords.

'It has drastically eroded relationships as tenants are now trying to avoid their landlords. When we were being paid direct, com munication was generally good.

'The law on eviction remains unchanged, meaning we can be seriously out of pocket by the time lengthy court procedures have been gone through. In the meantime tenants will be more tempted to walk away with the benefit of substantial sums in their pockets.

'Few had had time to set up bank accounts so had to use agencies such as pawnbrokers, who charge 5 to 7 per cent commission. Many have also been targeted by landlords offering sub-standard accommodation as low as £50 a week, or even £30, if two are willing to share. As single people in Blackpool who are over 24 are entitled to £75 it is of course tempting to take on tenancies which will enable them to pocket as much as £25 a week, even if it means living in squalid conditions.

Dribben adds that, since the allowance for couples with several children can, depending on the children's ages and sexes, be as much as £107 a week to allow for a sufficient number of rooms, they will be tempted to cram children inappropriately into shared bedrooms so as to be able to keep the saving on rent.

'The Government says the project's aim is "to give help with the dignity and respect that goes with the responsibility of handling personal finances and making choices". But we have to face the fact that many people are incapable of dealing with their financial affairs, are unable to hold down jobs or maintain personal relationships. All of a sudden they are entrusted with managing large sums'.

Chief executive of the Ashley Foundation, which runs three hostels for the homeless in Blackpool, Dribben fears that homelessness will increase substantially because people will be refused accommodation if they lose tenancies through non-payment. Ashley hostels are not obliged to take them in and are, in any case, full.

Chris Town, an RLA director and chairman of the Leeds branch, says that Leeds City Council has an advantage over Blackpool as it was one of the last to 'go live' so could hope to iron out some problems beforehand. 'In theory, there should not be too many problems as the Government has provided the authorities concerned with a great deal of money and advice.

'The council is trying to avoid difficulties by offering tenants advice, but just how it can do that, or who they decide to single out for direct payment to the landlord, is still under discussion.

'I'm on the Leeds forum and have taken the view that tenants who can provide credit reference checks, and good references from previous landlords, will need to be entrusted with the money. If this proves not to be so then we can always refuse to renew tenancy agreements; and it will be tempting to confine re-letting to those not in need of housing benefit'.

Town shares the concern of homeless charities that more people may end up homeless because the problem is likely to be exacerbated by compulsory registration of HMOs. As has already proved the case in Scotland, many owners may choose to convert HMO properties into self contained flats.

Town is equally concerned that tenants will be tempted to move into poorer areas of the city to pocket some part of the £82.50 rent for single people over 24. 'Set rates do, though, mean there will be less delay in assessment, and Leeds has pledged that initial payments will be made directly to landlords so that they become aware claims are active. We are currently pressing for rents to be paid weekly in arrears, but may have to settle for fortnightly.

'Some councils are paying four weeks in arrears but this is too long. It provides too much money for people on low incomes to deal with, and too much time for them to move on. I always advise prospective landlords to obtain references from current ones as it warns the latter their tenants are trying to move'.

The changes to housing benefit have been criticised by the National Homeless Alliance (NHA), which represents over 700 agencies working with homeless people. It fears more tenants will fall into arrears if they receive benefit directly.

It is also worried that the choice of substandard accommodation for lower rents may have a negative impact on people's health and create ghettos; and that there will be no incentives for landlords to raise the quality of accommodation for those on housing benefit as rental increases will not be allowed to take improvements into account.

The NHA is also concerned there may be fewer affordable properties of acceptable standard on offer. Additionally, it is pressing for proposals that would see benefits withdrawn from people who behave in anti-social ways to be scrapped. Such sanctions would again result in increasing homelessness, it suggests.

The DWP says the projects will be evaluated after two years by a consortium of the Universities of Birmingham, York and Loughborough, with the National Centre for Social Research.

The evaluation, which will also address the impact of the changes on homelessness, will be based on analysis of housing benefit management data, plus interviews with landlords, tenants, pathfinder authorities and their rent officers, Jobcentre Plus staff and other key stakeholders in all sectors. If found to be working well, the scheme will be rolled out across the country.

But Dribben has been told that Pathfinder is not a pilot which can be dropped if it proves not to work. 'The only reason why the initial launch is confined to nine local authorities is to sort out the kinks before going nationwide', he says.

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