Time for social landlords to realise enough is enough with government welfare policy

Yearly average bedroom tax cut is £779.  Cost to a social landlord to evict a tenant is more than 10 times that amount – Go figure!

Landlord can't afford!
Landlord can’t afford!

The cost to a social landlord of eviction is prohibitive and evicting the social tenant makes no financial sense at all.  This is NOW becoming a huge problem for social landlords due to so many arrears pressures of government policy.

A few years back Shelter did some research on costs to include arrears, legal costs, void cost, shuttering, etc that came out at over £7,000 per property.  Add to that many social landlords especially with larger properties in the North are also spending £3,000 or so on refitting properties in order to make them more attractive to new tenants and have greater advertising costs too a figure of £10,000 per property is not an untypical cost of eviction.  This is a direct consequence of the bedroom tax in the North and outside much of the South East and can only get worse with 5 more years of the bedroom tax.

Landlords do not and never have wanted to evict tenants.  The general refrain from them is we will only do this as a last resort which by and large is correct.  The extremely negligible use of Ground 8, at least to date, confirms that and this is where landlords can take away the judges discretion and make eviction mandatory.  I put into place arrears controls policy, procedures and systems for over and under payments at a large social landlord over 20 years ago in the good old days of new HB claims taking over 100 days to move into payment.  Landlord income has much greater risks today yet even then, while it was never mentioned publicly, arrears evictions made little financial sense except for the tiny percentage who were never going to pay.

Today it is many who would like to pay but can’t afford to pay – a radically different issue – and one that cannot be solved by red ink bombardment as witnessed in the early bedroom tax stage right down to pay up or social services take the kids; and one that cannot be solved by let’s get all tenants to take out a direct debit either.  Thinking has to change and radically.

Arrears eviction have been a last resort yet welfare policies of the Conservatives mean that more and more social tenants are getting to eviction stage – and to put it bluntly – landlords cannot afford to evict just as tenants cannot afford to pay. Landlords cannot continue with pro-tem ideas such as let’s convert the evicted tenant property to AR and mitigate as the overall (housing) benefit cap prevents that when the cap is reduced.

Privately landlords admit that tenants have struggled like mad to survive 2 years of bedroom tax and know they can’t last another 5 years which is correct.

Landlords totally missed the overall (housing) benefit cap policy that makes the ubiquitous 3 bed property financially toxic believing it to be a high rent area problem alone and even then just for private landlords, yet the first DWP estimate had 46% of all affected being social tenants.  New thinking is needed.

Last year saw a record number of evictions by social landlords who simply cannot afford for that to happen again, yet bedroom tax, benefit cap, council tax abolition, monthly welfare benefit payments, direct payment of housing benefit to the tenant and so many more make increased arrears a certainty.

Yet last year AR was still viable as the reduced overall (housing) benefit cap was still a kite flying exercise when it is highly likely to be in place fully by early July and has already seen the regulator state social landlords need to know what it means now and in 5 years time – which they can’t project properly as social landlords do not have the full welfare benefit data of tenants they need to do this! ESA in the working group and the tenant household is potentially liable for the OHBC, ESA and in the support group is exempt and that alone shows why landlords critically need precise details of all welfare benefits their tenants receive – data they haven’t collected in the past because they had no nee to collect and data to which they are not entitled to receive unless the tenant allows.

That is where my freedom to criticise as I have only myself to answer to is the blessing it is as the crass superficiality of the regulator in saying this a few days ago shows he doesn’t know what he is talking about in this regard.  Then again a number of social landlords still do not realise that the benefit cap is more correctly called the overall (housing) benefit cap as HB is the ONLY benefit to be cut unless the tenant household has 6 or more children currently and 5 or more children when it reduces to£23k per annum.

Social landlords cannot do nothing.  They cannot carry on as before.  They need to think and act smarter.

Social landlords have a major financial problem right around the corner and a series of battles like they have never had before.  Forget the old wounds of the schism that developed between council landlords and housing associations created all those years ago – that battle is so so tame in comparison, and what is more, the battles ahead affect ALL of the social landlord types from HAs to ALMO’s to council landlords because they all attack the social housing model which underpins all social landlords.

Social landlords cannot do nothing.  They cannot carry on as before.  They need to think and act smarter.

I use the Coast & Country example to explain what I mean by thinking and acting smarter wouldn’t and not because of my development of the idea and policy implementation but because there are very few, if any, other examples of brave and lateral thinking and actions.

For all those landlords who think jam jar accounts, credit union tie-ups and EET activities are innovative you need to think again! Such responses and actions are gauche given their universality and frankly while they can work well and generally do, so much more radical ideas are needed.  They are also paternalistic to a degree and smack of doing things FOR tenants rather than WITH them when the latter is very much needed.

Ask your tenants is they want to appeal the bedroom tax and want your help in doing so and the answers are Yes and Yes – and the longer term benefits to social landlords are huge in that as the landlord to tenant relationship the bedroom tax and other welfare reform policies which drive a wedge into that relationship are overcome.  In short, when direct and monthly payments come in, far higher levels of rent payment will follow.  The CCHA plan is not rocket science it is good business practice and the fact that the costs of this have more then been recovered already by CCHA in additional HB income is a bonus.

It is this type of ‘radical’ policy that social landlords need to look at.  One of many non typical ideas that can and should be tried as pilot programmes for which many variants have been developed including one social landlord who actually pays the bedroom tax for some tenants tied to a form of acceptable behaviour contract that surprisingly does stack up financially.

What these type of ‘radical’ policies do is tell the tenant that their landlord – and yes tenants use the possessive about their landlord as much as landlords do about their tenants – that the landlord has empathy to their plight and stands four square behind them, which do and will lead to greater rent payments when direct payment and monthly payment hit.  The goodwill such policies ‘buy’ is simply good business practice and only appears radical to the all too typically cautious social landlord.

From the beginning social tenants and activists said enough is enough with the bedroom tax and now it is very much a case of social landlords needing to say the same – enough is enough, as that does reflect the reality of social housing whether landlords like it or not.

Social landlords cannot do nothing.  They cannot carry on as before.  They need to think and act smarter.

 

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Read more about the CCHA plan here and here

Read more about the cost of eviction here and here (pdf) – and some others put cost at up to £24k per eviction

Yearly average bedroom tax is £779 per year or £14.93 per week – Feb 2015 DWP HB figures Table 3

 

 

 

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