Work and Pensions Committee
Oral evidence: Benefit Levels in the UK, HC 1126
Wednesday 28 June 2023
Ordered by the House of Commons to be published on 28 June 2023.
Members present: Sir Stephen Timms (Chair); Debbie Abrahams; Siobhan Baillie; David Linden; Steve McCabe; Nigel Mills; Selaine Saxby; Dr Ben Spencer; Sir Desmond Swayne.
Questions 156 - 210
Witnesses
I: Francesca Albanese, Interim Director of Policy and External Affairs, Crisis; Balbir Chatrik, Director of Policy and Communications, Centrepoint; Ben Twomey, Director, Generation Rent; and Dr Carin Tunåker, Lecturer in Law and Homelessness Researcher, University of Kent.
II: Ben Beadle, Chief Executive, National Residential Landlords Association; Timothy Douglas, Head of Policy and Campaigns, Propertymark; Professor Peter Kemp, Professor of Public Policy, Blavatnik School of Government, University of Oxford; and Sheila Haig, Customer Manager, Transactions—Assessment and Finance, Corporate Services, City of Edinburgh Council.
Written evidence from witnesses:
National Residential Landlords’ Association BPI0043
Witnesses: Francesca Albanese, Balbir Chatrik, Ben Twomey and Dr Carin Tunåker.
Q156 Chair: Welcome everybody to this meeting of the Work and Pensions Select Committee for our inquiry on benefit levels in the UK, and we warmly welcome the members of our first panel. Thank you very much for joining us. I invite each of you to tell us very briefly who you are, starting with Dr Tunåker.
Dr Tunåker: I thank you very much for inviting me. I am a lecturer in law at the University of Kent and a social anthropologist, with experience of research into rural homelessness specifically.
Ben Twomey: I am the director of Generation Rent. We are the voice for private renters across the UK.
Balbir Chatrik: Good morning. I work at Centrepoint. Centrepoint works with homeless young people across England, 16 to 25-year-olds.
Francesca Albanese: I am the director of policy and external affairs at the national homelessness charity, Crisis.
Q157 Chair: Thank you all very much for being with us. Can I ask you briefly to set out for us how effectively you think the current benefit system supports housing costs and the ways in which you think support should be improved?
Dr Tunåker: I think we have a major problem in terms of local housing allowance at the moment when it comes to meeting rent levels. I have done a lot of research into people who experience homelessness and the reasons for homelessness, and the lack of benefits to cover rent is a major problem.
I have specifically looked into how that works in rural areas of the UK, and what I believe the local housing allowance needs to be unfrozen and increased to meet rent levels, both in urban and rural areas. The cost of living crisis and various other reasons in the context we are in right now have affected rural areas very badly. Affordability is a huge problem. We have seen huge increases in homelessness over the last year, with a 24% increase in rough sleeping, for example.
Part of the problem is that people cannot afford to pay rent in the private rented sector. This is something I believe needs to be rectified.
Ben Twomey: The current situation is not working. The local housing allowance is not working for tenants, because they cannot afford to have a choice in the market; they sometimes cannot even afford to be in the market at all in some areas when choosing where to rent. It is not working for landlords either. You might think it is relatively rare for tenant organisations and landlord bodies to say the same thing, but we are united on this front. Tenants want to be able to pay their rent on time, as it relieves stress and gives them security in their home. And landlords want to receive that payment on time, of course, because that is the market they are in.
It is not working in terms of the levels of local housing allowance. We want to see the local housing allowance unfrozen. We would like to see it put back to the 30th percentile of the market rate, and maybe that would be a minimum, so you would want to look at the median market rates. What has happened since the pandemic over the last few years, since the rate was frozen, is that there has been a massive hike in rents, a big increase in demand again—particularly as younger people are moving back into the rental sector, away from their parents—and none of that has been caught up with by the benefits. It is a safety net that basically has huge, gaping holes.
The solutions, the local housing allowance being unfrozen is important. We also believe in protections from eviction for tenants, which is something that prevented homelessness over the pandemic. The Renters (Reform) Bill has had its First Reading, and we are still awaiting Second Reading in Parliament. Within it are some good and bad things said about evictions, and I will get on to those later.
Balbir Chatrik: In terms of benefits, the word you will hear me say quite a lot is “fairness”. Young people get a lower level of personal allowance, but they have the same costs. The other area that I will be covering is on making work pay. If you live in a hostel and you work, on average you will get £40 less than your counterparts in the private rental sector. That is just not fair.
The third point I would like to make is to echo what my colleagues have said about the local housing allowance. It needs to be unfrozen.
Francesca Albanese: The broad principles are that the welfare system is a lifeline for many people who are unable to afford their rent, whether that is because they have lost their job, they have an illness, they have caring responsibilities. At the moment it is not meeting those needs. As everyone has talked about already, we have seen rents go up significantly, particularly in the last couple of years and particularly in the private rented sector. We published some research yesterday with Zoopla, which showed that only around 4% of the market is now affordable for people on housing benefit. That is pushing many people either to cut back on other living costs—which are also going up, as we know, in terms of food and fuel—or it is pushing people into homelessness.
Through our frontline services, we are seeing an increase in people coming forward who have either been in the private rented sector recently or are seeing their rents go up, and that is not a sustainable option. I agree with what everyone has said: we need to look at unfreezing LHA again. It was done during the pandemic, and it ensured the housing market was affordable for people on housing benefit. That is something we want to see looked at. Over the longer term, it is about looking at wider supply issues in terms of increasing social housing, so that rents are more affordable in different tenures.
The final point is that we want the housing benefit system to function, but at the moment there are too many areas that are pushing people to either not be able to afford to live there in the first place or being pushed into homelessness.
Q158 Chair: Do any of you have comments on two aspects of the current system? One is what is colloquially known as the bedroom tax, more correctly known as the removal of the spare room subsidy. Are you seeing much impact from that in the work you are doing? Secondly, a very different area, discretionary housing payments. How helpful do you see them to be when people get into trouble?
Balbir Chatrik: It is anecdotal evidence. When young people move on from Centrepoint, they usually go into the private rented sector, and often that is when they go to the local authorities to make up the shortfall between the LHA and their actual rent. What we have heard anecdotally is that different local authority areas will either use the discretionary housing payment for that, or they will not. That is what we have heard. That is what it is being used for, in the evidence we have.
Q159 Chair: Where people cannot get discretionary housing payments, is that because of a policy in a particular local authority, as far as you can tell?
Balbir Chatrik: We don’t know. We have tried to get to the bottom of it, but we don’t know. Young people are just told, “No, you cannot have that.”
Ben Twomey: In our experience, the way the discretionary housing allowance works essentially varies over different local authority areas. One of the most common criteria for it is for a tenant to be eligible for homelessness assistance under part VII of the Housing Act 1996. That means that, if the lifeline and safety net of local housing allowance isn’t working and they have already reached the point where they are potentially at serious risk of homelessness, introducing discretionary housing allowance at that stage is sometimes too late because they are already at the point of rent arrears and potentially looking at a county court judgment against them, which can hang over them for some time and make it very difficult to find somewhere to rent.
I would also point to the fact that, when you are working out how to access the rental sector as someone who is on a low income—which is almost always the case, of course, when you are on local housing allowance—there can be a challenge in the requirements just to enter a property. You have the affordability test, which is usually having an income that is two times the rent. If you cannot reach that, there are ways around it. I will give you an example. Just this month, Generation Rent had a nurse who, having recently found that they were being evicted, was looking for a new property. They did not reach the affordability test, so they were asked for 12 months’ rent up front. Not only that, but they were also asked for a guarantor, so they were to give a year’s rent and also had to find someone to guarantee payments to the landlord beyond that.
These kinds of conditions are coming in. They are often very discriminatory, because those who are in receipt of benefits are less likely to have the thousands of pounds needed to give multiple months’ rent up front. They are also less likely to know somebody who is in the position of having enough income to be a guarantor.
Dr Tunåker: I echo that absolutely. To build on what you have just said, the discrepancy between the timeframe and the bureaucratic procedures can put people into debt who are trying very hard not to be. Without discretionary housing payments to help cover that shortfall, they will start life in a continual cycle of debt, which is extremely detrimental to somebody who has most likely already been through trauma and challenges to be in the situation they are in.
I want to add about the bedroom tax. The under-occupancy deduction disproportionately impacts rural areas, which have lower levels of affordable homes—8% of stock compared with 19% in urban areas, for example—and fewer one-bedroom properties. When you think about what type of properties are available, there will be a subsequent reluctance to provide one-beds and higher void levels, and this also impacts on viability.
Francesca Albanese: I will come back to discretionary housing payments. The main thing is it is a sticking plaster for local councils to make up shortfalls where housing benefit does not cover the cost of people’s rent. Because there is a growing gap for many households, for a lot of local authorities it is not enough. It was £100 million last year, and it has remained at that. That is a real-terms cut when we are seeing rents go up.
What we have also heard is that, for many local authorities that are looking to use the private rented sector to discharge their homelessness duties, finding affordable properties that would be sustainable from a cost perspective is difficult. While they can use discretionary housing payments in the short term, that is not sustainable and there is a risk of placing a household into a property that they cannot afford in the long term.
Q160 Selaine Saxby: Good morning. I will come to Dr Tunåker first. I know we have already spoken quite a lot about rural and urban housing, but in the report you led, “Homelessness in the Countryside: A Hidden Crisis,” you mentioned that poverty is often perceived as an urban issue—I am a very rural MP—and the welfare system is not well adapted for rural lives. How do you think we could adapt benefit levels and the welfare system to reflect rurality?
Dr Tunåker: That is an excellent question. Professor Helen Carr from Southampton and I have done this research project, which was a collaboration with a steering group spearheaded by English Rural, and we spent one year looking at what the issues are in rural areas in terms of housing and all types of homelessness.
When we looked at rural poverty and housing affordability, we found that the differences between urban and rural are vast. We tend to disregard the rural issues because there is a perception that rural areas are affluent. As you have said, Selaine, we believe that people do not have poverty in rural locations or in the countryside. This has created a lack of effort in counting or knowing the exact numbers of people experiencing homelessness, and subsequently there is less funding pulled into those areas.
One of the things we need to do to make rural homelessness count is to think about rural-proofing policies. When we are reading through policies, making policies or thinking through our allocation of benefit, we need to imagine that a lot of the issues in rural areas are completely hidden. We don’t know enough about them, and we need to consider that the experiences are different. There are major issues with transport, so people cannot get to support, people cannot get to the jobcentre to sign on or to get the benefits they need for their housing, people have issues in getting very specialised support. Anyone who needs a specialist health service, for example, is likely to be far away from that or have difficulties in getting there.
There are multiple things that have impacted on how affordability is playing out in rural areas, partly because there is no expectation for rural areas to have those issues. I firmly believe that the welfare system is not adapted to rural issues. Housing is also mostly adapted to wealthy high earners and is exacerbated by second homes and holiday lets taking up space in the housing market. High earners working in urban areas and commuting from rural areas is also taking up housing stock. This means there is a lot less availability for private rented accommodation, and there is no real support for that accommodation in those areas.
Q161 Selaine Saxby: To the rest of the panel, is there anything you would like to add on how you would differentiate the experience of benefit claimants’ access to housing in rural versus urban areas?
Ben Twomey: If I could add the specific issue of holiday lets, perhaps better described as short-term Airbnb-style lets. There has obviously been a large increase in the last few years. Sometimes they are associated with the seaside, but they happen in all rural areas. They also happen in cities where there may be a lot of tourism.
The areas with the lowest proportion of homes that are affordable for people relying on benefits were found to be the south-west of England and Wales, so that is 3% and 2.5% of homes currently advertised on Zoopla compared with 5% nationally being considered affordable for those people just from the local housing allowance. Those regions and the nation of Wales have been hit the hardest by the growth of holiday lets in the past eight years, and that was particularly pronounced during the pandemic.
What that meant in the latest data was that across the UK we were losing 29 homes every day to holiday lets, 29 rental homes moving into the short-term holiday let market. That has increased the demand. It has led to some of the hikes in rents, and our answer to this, which would benefit rural areas but also cities and towns, is to scrap the mortgage interest relief for holiday lets, to bring it back in line with residential tenancies, so there is no incentive for landlords to move out of the rental market in that way, and give councils power to license holiday lets and set caps on their numbers.
Selaine Saxby: Please give us some of your data. You sound just like me. As the MP for North Devon, it is an observation that I understand.
Q162 David Linden: Let’s talk about under-25s. I think it is probably best that I direct this question to Dr Tunåker and Mr Twomey. How do current benefit levels and housing policy impact people under the age of 25?
Balbir Chatrik: Shall I start? At Centrepoint we work with 16 to 25-year-olds and, as I said earlier, there is a level of discrimination against young people in the benefit system in terms of the personal allowance. They get almost £80 less a month than adults. As we all know, shops charge you exactly the same amount for bread, milk, whatever it is, whether you are under 25 or over 25. The assumption of this policy is that young people are living at home. From the research we have done, we know that 129,000 young people are either homeless or at risk of homelessness.
Of the young people who come to Centrepoint, almost two thirds of them say their family is unwilling or unable to keep them at home. That includes young people fleeing domestic violence as well. Those are young people who cannot stay at home. They do not have a mum, dad, grandma or aunt, who is going to throw them a fiver or a tenner or even £20. They are living on their own, and they have to support themselves. There is no reason why they should receive a lower level of benefit, because they are living alone and nobody else can support them.
Q163 David Linden: You pre-empted my next question, which is what the case was for a lower standard allowance of universal credit. I think you have covered that already.
How could and should benefit policies reflect differences in living circumstances for claimants under the age of 25? For example, where somebody still lives at home.
Balbir Chatrik: We know that we live in an era in which there is not a lot of money, let’s be honest. What we need to do is look first at those groups that are homeless and care leavers. They are the ones we should start with in terms of equalising their benefit with over-25s. Yes, at Centrepoint we want equalisation for all young people, but we know that is not realistic. Let’s start with those who are most disadvantaged and need that support the most: care leavers and young people who have experienced homelessness.
Q164 David Linden: Do you think the Government have a problem with under-25s?
Balbir Chatrik: I will be honest. I think society has a problem with young people. The way they are portrayed—youths, yobs and so on. “They do not want to work,” or, “They are all out partying,” and pejorative terms such as “snowflake” and so on. I think we all have a problem with young people.
David Linden: There are plenty of people who party in Downing Street, so it is not just young people.
Dr Tunåker: I want to echo that point. If you look at the housing market for young people, it is incredibly hostile. Very few young people are likely to be able to buy their own home, and maybe even to rent one. If you think about the homeless young population, these will be people who are likely to have gone through childhood traumas. They will be people who need more support, but they are afforded less. We are setting them up very badly for the future.
We are looking at people who want to try to get themselves their own flat and be a productive member of society, to go to find a job, and they find themselves in a vicious cycle where landlords do not want to rent to anyone who is under 25, and they will not be able to find a job without somewhere to live. It is thoroughly unfair.
Ben Twomey: As a director of Generation Rent, you will not be surprised if I agree that young people feel under attack in the way they engage with housing now. It has never been more desperate. The idea of home ownership feels so distant for so many of us. The idea of getting a social home is out of reach because not enough have been built in recent years.
To go into the private rented sector it is not 25 years old where you see the major issue; you have the lower rates up to 35, the shared accommodation rate, in which you have to move into a house of multiple occupancy, which again councils and often politicians are objecting to when they are rising up in their areas, but that is the only place that someone with a local housing allowance who is under 35 can go to, subject to a few discrepancies.
Other than that, they can stay at home, I suppose. It is interesting how the local housing allowance, benefits and universal credit interact with young adults who are at home. There are 358,000 private rental households in England that contain independent children living with their parents, so that is adults living with their parents. That is 358,000 private rental households compared with the 332,000 that are in shared accommodation, so there are more young adults living with their parents in a rented household where they receive some form of benefit than there are out in the rest of the rental sector.
That is quite striking, because there are real issues with the way the local housing allowance is provided meaning that if you are a young adult, and you would be in receipt of benefits, unless you are a named tenant with your parent you are unlikely to receive the local housing allowance part of that benefit. Therefore, you are essentially infantilised again. You are putting a greater burden on the parents, for example, who are in receipt of benefits themselves. It can seem like an assumption is made that you will always be able to contribute towards the rent, despite there being nothing provided for you.
That is a major area to look at in terms of those young people who find themselves trapped either at home or not being able to afford to get into the private rental sector, which is the only option when we talk about home owning and social homes not being enough right now.
Francesca Albanese: On under-35s and the shared accommodation rate, in relation to homelessness, we see a lot of people come through to our services who are either at risk of homelessness or are currently homeless because they cannot afford a property. There are a couple of things to pick up quite specifically. One is that we know there are exemptions for certain groups, so care leavers and people leaving prison, but these are inconsistently applied and often jobcentres are not aware of them.
The other issue with shared accommodation is that the data shows there is less of it, compared with other bedroom sizes, and fewer properties. Sometimes the local housing allowance rate will not be accurate for that year, and that causes issues in terms of bigger shortfalls.
Q165 Siobhan Baillie: I welcome this kind of focus and understanding about hidden homelessness for young people. I left home at 15 and sofa surfed. I ended up all over the place. It has always been there. To your point about the lower standard allowance of universal credit for under-25s, we would all like to target the most vulnerable groups, but the policy is always open to abuse. Have you ever worked out how that would be implemented? Would it be people who turn up at Centrepoint? How would you prevent the policy from being open to abuse by, say, families saying, “We are going to declare you homeless so we can get more cash out of you,” or the young person just going out to get more cash? Have you thought that through?
Balbir Chatrik: We have. If you think about the shared accommodation rate, we received exemptions two years ago and MPs across the House were very supportive. Young people who are care leavers and young people who have been in supported housing for a minimum of three months are exempt from that, which means they can rent a studio or a one-bedroom flat. The mechanism is already there. We can just use that mechanism for universal credit. Young people have to prove that they are either a care leaver, which should be in the system, or they have been in supported accommodation.
Q166 Sir Desmond Swayne: Given what you have just said, in what way could the shared accommodation rate be better targeted and improved?
Balbir Chatrik: From Centrepoint’s perspective—and I do not want to be too parochial about this, because I think it doesn’t work for a lot of young people—under-25s who have been homeless or are care leavers are exempt. That is because they are vulnerable. What often happens is they get exploited in shared accommodation. For that group, the exemption is working, but I am sure colleagues work with other groups that should be exempt as well.
Francesca Albanese: It is probably taking it back to the role of housing benefit. Rather than looking at how the shared accommodation rate should be improved, does the shared accommodation rate cover the rental market? Currently it doesn’t. It is about making sure that other groups that are not subject to exemptions are able to access housing when they need it, in terms of being able to afford rents via housing benefit if they are in that situation.
Q167 Sir Desmond Swayne: Are you saying it is not enough, or are you saying that you are against it in principle? I shared accommodation until I was 30, as have all my three children. Why should it be different for anyone else, granting the exceptions to which you have drawn attention? Why are you against it in principle, or are you just saying it is not high enough?
Francesca Albanese: I am saying we need to look at both, because it is not high enough. It is not high enough now. It doesn’t cover rental costs. There are all the issues I have talked about in terms of that being a problem across the board. It has been increased from 25 to 35. It is currently 35, and shared accommodation is not appropriate for lots of people who are under the age of 35 because of their personal circumstances. It is about also being able to—
Q168 Sir Desmond Swayne: Are you saying there should be more exemptions than the two to which we have drawn attention? There are a few more exemptions, but is your complaint about the lack of exemptions for those people who can show that it is quite unsuited to them? Or are you saying that people should be able to have accommodation on their own and not share, in which case why should there be an incentive and advantage for those people who are on benefits rather than those who, like me and my children, shared?
Francesca Albanese: Benefits are there for people who need them, at a point where incomes are low. It is worth also saying that a lot of people in work are accessing housing benefit because wages are low and rents are too high. There are lots of different circumstances in which people would need to access housing benefit to cover the cost of their rent.
Ben Twomey: The terms of reference for this inquiry is to look at how the benefits meet the need that is out there. Clearly, in terms of local housing allowance, especially when it comes to the shared accommodation rate being a lower level, that does not meet the need, because the demand is so high, there are not enough houses in multiple occupancy to house these young people who may want to live in these areas, and the 35-year-old point is a line that was drawn arbitrarily.
It is not an evidence-based point at which 35 is an age where it is more appropriate to enter your own home, on your own. It was probably made up to decide where the costs should or should not lie, and that is a decision for Government to make, but it is not a needs-based decision. They have not started from the point of where the need is for these young people, how we build the right homes for these young people and then ensure that they have security and equality in those homes.
If you get away from that question of where the age should be, the affordability point means that, essentially, many people are being excluded from housing and finding themselves evicted so that rents can rise even further.
Q169 Sir Desmond Swayne: What metrics do you have to show that there are not enough houses in multiple occupation? There are councils that are imposing planning restraints on any further houses in multiple occupation because they have too many.
Ben Twomey: The way the market works is that the demand demonstrates the lack of available housing. You can see with the rent hikes that rents are now at an historic high, including one rooms. A single bedroom is close to £1,000 here in London. That increase happens when there is too much demand and not enough supply.
Q170 Sir Desmond Swayne: Do you accept that, if you share accommodation, your rent will be lower than if you rent accommodation on your own, and the benefit system should reflect that?
Ben Twomey: Yes, if it is affordable in terms of the type of home that you are renting.
Q171 David Linden: In what circumstances should people with no recourse to public funds be able to access housing benefit?
Francesca Albanese: We need to start on the basis that everyone should have access to a safe home. Where we work, we see that people with NRPF are destitute. They have been pushed into extremely vulnerable circumstances, so at that point we need to do everything we can to ensure that somebody gets access to a home, because from there they can build other parts of their lives.
The other thing to say, in terms of NRPF, is that we know there are circumstances where people can be very vulnerable. For example, women with no recourse to public funds can be very vulnerable to exploitation and abuse. We also know that, for a lot of people, being pushed into this situation is not out of choice. We argue that the benefit system—particularly if we are talking about housing benefit—is there to enable people to access support when they need it.
Q172 David Linden: I am going to push you a bit further and ask you to develop on how parents of children, in particular, are impacted by limited access to benefits when it comes to NRPF.
Francesca Albanese: Crisis mainly works with single adults. Particularly, when we look at our own services, most people who we work with who have no recourse to public funds don’t have dependent children with them. We are aware that, if you have NRPF and you have children and you have not been able to access accommodation, it is incredibly dangerous and extremely traumatising for the children, and it should not happen.
If it is okay, I would like to follow up with written evidence on this, rather than continue.
Q173 David Linden: You are welcome. Lastly, and I will open up to the panel after this, the Committee has heard that guidance relating to the support available to folk with no recourse to public funds through the social security system is a bit unclear. What areas of guidance would most benefit from clarity in that respect?
Francesca Albanese: Again, because it is a very technical question in terms of guidance to do with NRPF I would rather follow up and get it correct than talk about it now.
David Linden: It will never catch on in this building. People quite often pontificate their views without knowing much, so I appreciate that.
Chair: We look forward to those additional written points.
Q174 Nigel Mills: Can I turn to the situation of people in supported accommodation? I think the rules probably work even less well in that situation. Balbir, do you want to start us off? How does it work now? What should we change?
Balbir Chatrik: Simply put, young people in supported accommodation, hostels, if they start working, have a cliff edge. They are on universal credit, but they also get housing benefit for their housing costs.
Maybe I can explain it a bit more clearly. Young people in a hostel can work for about 12 hours a week, and they are subject to universal credit rules. If they start working 13 hours a week, they are subject to housing benefit rules. They get a £5 disregard, and then everything else has 65% taper rates. Their peer, who is out in the private rented sector, will be on universal credit, universal credit housing costs, and their taper rate is 55%. Basically, they will probably be about £40 a week worse off in supported housing.
Remember, young people in supported housing are the ones who need more help to stay in work. They have nobody who is going to throw them a fiver or a tenner for their bus fare and so on. They are the ones who need support to be in work and for their career prospects. They want to work. Young people want to work, but they have this cliff edge. If they work two extra hours, it is not worthwhile them working.
This was an unintended consequence of keeping supported housing within the housing benefit regulations. It could be changed easily, almost at the stroke of a pen, and it needs to be changed because it is unfair that young people in supported housing are disadvantaged compared with their peers in the private rented sector.
Q175 Nigel Mills: Is the simple change just to change the taper rate to 55%?
Balbir Chatrik: Absolutely, yes, so subject to the same rules as universal credit. It is very simple. Young people will be able to work, and that is great for them, and great for our tax income as well. They want to work.
Q176 Nigel Mills: Are you seeing people stay in supported accommodation longer than they need to be because they cannot get the work and progress?
Balbir Chatrik: Yes, absolutely. It stops them from working when they want to work. They will be working and not realise that, if they work two or three extra hours, suddenly their income is going to go down, so they will continue working and then it has an impact on their housing benefit and then they get into arrears. The knock-on consequences of this policy are massive for vulnerable homeless young people.
Q177 Nigel Mills: Of course, the longer people stay in supported accommodation, it is quite expensive. In fact, we might be better off helping people leave quicker than having short-term penny pinching.
Balbir Chatrik: It is better for them. Our research has shown that about one in five young people are ready to move on from supported housing, but they are stuck. The main reason they are stuck is because there is not enough affordable accommodation. We want them to work with us, we want to teach them those employability skills, so they can take them with them once they leave us. That is important. It is that ethos of work that is important.
Dr Tunåker: You also have to imagine the exact same situation, and for adults also, and imagine that we are not in a city centre. Most of the time when we think about these issues, we think about somebody who will have ample work opportunities around them and housing opportunities that are suitable for their phase of life and affordability levels. That is not the case across the country, and we need to think about different areas differently.
Q178 Steve McCabe: Good morning. I want to start with Francesca on this. I want to ask about the sanctions issue, and I think Crisis commented on that in their evidence. Basically, they said sanctions should not be imposed unless it is known that a person can continue to cover their rent. Does Crisis have evidence that that is quite widespread, that sanctions are imposed where people end up unable to cover their rent?
Francesca Albanese: There are a couple of pieces of evidence. Again, I can follow up in more specific detail, but we know there has been a recent survey of frontline staff that says nearly half of them have supported someone who had experienced homelessness because of a sanction. That is fairly widespread, and it is across the homelessness sector, so it is not just Crisis’s frontline staff.
We did some research on this, which is a few years old now but we know that the levels of sanctions have continued to be maintained, so it is similar in terms of trends. We know that around a fifth of respondents said they had become homeless because of a sanction. The impact of sanctions has a direct link to homelessness.
Q179 Steve McCabe: There is an easement policy where you can get changes to the claimant commitment, although I think the individual is responsible for flagging that up to their work coach. In your experience, how well does that work? How easy is it to spot or identify an individual who would qualify?
Francesca Albanese: You have already started to answer the question. It is reliant on the claimant themselves, so they may not be aware that they are eligible for an easement. That is the first barrier. Because it relies on individual staff or particular jobcentres making sure it is available, there is variance in practice.
We have found that it has been successful where training is done with jobcentre staff on identifying someone who is at risk of homelessness, in terms of having a more personalised support plan for that individual and applying the easement, and staff would be proactive in that. There is variance in how widespread that is known about.
Q180 Steve McCabe: Are there any specific changes you would recommend to the sanctions policy to try to support this group or avoid the risk of falling into homelessness?
Francesca Albanese: I would put forward that if someone is at risk of homelessness, or is homeless, sanctions should not be applied. It just pushes people further into poverty. It also means that their tenancy is at risk if they are already in one, but they may be in rent arrears already. Their income may be at risk as well.
The other thing to say is that, in the current context, even if you are keeping up with your rent, you are probably cutting back on other essentials such as food and fuel. A sanction in those circumstances is not going to be supportive. It is going to push people further away from help and it is going to push people further away from the job market.
Q181 Steve McCabe: I want to check that I have understood this correctly. Are you recommending that the decision-maker should have a specific requirement placed on them to demonstrate that they have checked that before a sanction is applied?
Francesca Albanese: I would need to think about the practicalities but, in principle, yes. We may need to look at how that would apply in practice.
Ben Twomey: It can be easy to imagine that sanctions are made against an adult who is refusing to comply with various work requirements or applications, for example. There are at least 2 million children living within the private rented sector in households where there is a local housing allowance. Therefore, you are not just sanctioning the adult; you are sanctioning families and children. That has a knock-on effect that means private landlords are, as you can imagine, quite rightly reluctant to accept tenants who are on universal credit, because they think it may not be a reliable source of income if these sanctions come up.
If I may give a very brief anecdote of someone who we have worked with in the past, Callum. He is a care leaver. He is in his 20s and he was unemployed and in receipt of universal credit with a housing element. I spoke to Callum yesterday. He had been out of work for a while when he managed to pick up a few shifts from an agency, so he was very excited, if a little anxious, because it was his first time getting back into work. It is exactly what the benefit system is designed to promote in terms of confidence and aspiration.
Unfortunately, there was an error with universal credit where the Department for Work and Pensions let him know that he was on the taper rate, but the taper rate was greater than the amount of work that he had been doing, which meant that he received less money than he anticipated that month. That was despite being careful and despite getting on the work ladder.
To go to your point about how hard it is to get through a person, Callum was informed through his journal, as they call it, so he saw it come up on the universal credit system. It was an automated system. He struggled to find any support, not just from the Department for Work and Pensions but also from the local council. He found it difficult; he found them to be obstructive. In the end, he had to go to court because he ended up in rent arrears. He was about to get kicked out of his home and he fought the case, and the judge basically agreed that there had been errors in the benefit allocation.
After months of stress, Callum was allowed to stay in his flat. That was a serious mental health crisis that happened over Christmas for Callum. It was an enormous amount of extra work that prevented him from finding productive work. It filled his days with administrative burden and financial strain that did not need to be there. Callum told me yesterday that, through no fault of his own, he fell into rent arrears, and he believes, “Society looks down on people like me.” That is how he put it.
If we think about what the benefit system does in encouraging people into work, it must promote confidence in young people, it must promote aspiration. To make them feel stigmatised and worthless is the opposite of what the system should do.
Dr Tunåker: A small point from our research findings in rural areas is that transport links are incredibly expensive, sparse and sometimes non-existent. Sanctioning happens a lot in these areas, and there are issues in consistently applying for and getting to jobcentres to apply for benefits.
One of our survey respondents, a professional from the housing sector, said, “There are less services to start with. Due to distances, transport is a major issue. Affordable public transport at useful times is lacking. Hubs and council accessing the jobcentre are useless when people can’t get there. Phone and internet can be unreliable, which leaves people very isolated and further makes sanctions easier to happen, and services will not travel out to rural areas because of cost.”
Balbir Chatrik: Young people in our hostels do get sanctioned. I think if the job coach had to speak to a worker, they would be able to be told the circumstances because it is very hard for vulnerable, homeless young people to advocate for themselves. We have been trying to get DWP to mandate that, but it has not happened yet.
Q182 Steve McCabe: You can do it, as I understand, but you must apply to be an advocate on behalf of a young person. Is that right?
Balbir Chatrik: We have been going around in circles with DWP because you can apply for that, but if that worker is off sick that day or they are on holiday, they will not talk to anybody else. It is a named person, which does not work in a hostel.
Q183 Sir Desmond Swayne: There was a period for about three months when, in shared accommodation, my rent was higher than my income, so I moved and got another job. That is a reasonable expectation to make of young people, isn’t it, unless there are particular circumstances that prevent them from doing so, that they should move and get a better job, particularly when there are so many vacancies?
Ben Twomey: With respect, Sir Desmond, I think the situation may have changed in terms of the affordability of rent since that time. It does not mean just moving down the road; it potentially means moving out of the city, moving to another area.
Sir Desmond Swayne: I moved from Falmouth to London.
Ben Twomey: Sure. For many young people, it is important to maintain support networks, to have a stable sense of community. Otherwise, we are saying that those who are financially strained have to be rootless, essentially. I don’t think that is a good system to create in terms of building communities and having resilient networks within your community.
Right now, for a person in work, 40% of your wage packet is going straight to your landlord if you live in London. Over a third of it is going to your landlord if you are elsewhere in the country, on average. That means that, when it comes to deciding where to move, it can be a challenge. You must go further away, and you must shrink the size, and that may be possible.
When you go to lower-quality accommodation, you also find yourself incurring extra costs. If you take energy as an example, you are likely to be on a prepayment meter, so that hikes the cost of your fuel bills and maybe keeps you trapped in fuel poverty. Also, the lower-quality homes, the more affordable homes potentially, generally have a lower energy efficiency rating. That means you may be spending many percentage points more than your peers just because you have thin walls, you do not have proper insulation, you do not have a good boiler, all of those things that mean that, even behind the scenes of your local housing allowance covering what you have, does universal credit stretch to make sure you can afford to live?
Balbir Chatrik: It is a good point that you make, and we are building some housing for young people, homeless young people, and we are making it affordable. They pay only a third of their rent in this accommodation, and it is in Southwark, in London. They must be single; they must also be in work or an apprenticeship. Unfortunately, with some provisions coming down the road in the Renters (Reform) Bill, we are not sure if we can continue with that kind of accommodation.
This is about young people getting their first or possibly second step on the job ladder. What is going to happen is we are saying, “Stay there for three years, five years maximum”. It is like a two, two, one-year lease. “Then at the end of it, you hopefully will get a promotion, so you do not need to live in that kind of accommodation.” As I say, we are worried about the provisions in the Renters (Reform) Bill that, with no fixed-term tenancies, will make such accommodation unviable. We want to encourage young people to move on in terms of their job prospects as well.
Dr Tunåker: The assumption that anyone can go and get themselves a job and a place to live is problematic. There are assumptions that this is an entirely equal society, where anyone can just go and get what they need. What we are seeing is that there are intersecting disadvantages that are making some people more vulnerable than others in the housing system, the welfare benefit system, the education system and the work and employment system.
That means that people we know are more likely to face discrimination in these areas are not going to be able to take the steps that we assume people make. For example, those who identify as LGBT+, people from ethnic minorities, people with disabilities and so on. I think it is important to recognise that there are inherent inequalities in all the systems, and that not everybody can just go and get them in the same way.
Chair: That concludes our questions. Thank you very much to all of you for joining us and for the helpful answers that you have given, and thank you for offering those follow-up notes as well. We are keen to have those.
Witnesses: Ben Beadle, Timothy Douglas, Professor Peter Kemp and Sheila Haig.
Q184 Chair: Thank you all very much for joining us. I think you were all listening to the previous session, so thank you for doing that. I start by inviting each of you, as I did with the previous panel, to tell us very briefly who you are.
Ben Beadle: I am the chief executive of the National Residential Landlords Association, a trade body representing 105,000 property owners.
Timothy Douglas: Good morning. I am head of policy and campaigns at Propertymark. Propertymark is a professional membership body for: property agents working in residential sales, lettings and commercial property; valuers and auctioneers; and property inventory service providers. We have over 17,000 members across the UK.
Professor Kemp: I work at Oxford University and most of my research throughout my career has been on private rental housing and housing benefit.
Sheila Haig: I am the customer manager at City of Edinburgh Council with a remit covering housing benefit, educational benefits and all things assessment and finance.
Chair: Normally when we take evidence from someone based in Edinburgh they are on the screen, so thank you very much for coming all the way and being here in person. We are grateful.
Q185 Selaine Saxby: Good morning. What is the impact of current benefit levels and local housing allowance rates on tenants?
Ben Beadle: Disastrous, frankly. We have seen local housing allowance frozen for three years. We see rents, based on ONS figures, increasing at 5% in the 12 months to May, the highest on record. We see a real squeeze in the sector, with almost 60% of people having a gap between their rent and their allowance, and we see landlords experiencing a crisis of confidence, too. We find ourselves in not the prettiest situation, I think.
Timothy Douglas: I echo what Ben has just said. The context is that we are in a hugely competitive market now. Demand for private rented property is outstripping supply, and that is evident from our member surveys based on April 2022 to April 2023. Demand is up 24% in terms of applicants registering with agents. Of course, in that time landlord and agent costs have increased. Essentially, where the local housing allowance benefit system comes into play, it is simply not keeping up with that rising cost and rise in rents.
As an example, yesterday I was speaking to an agent based in Portsmouth and they were reflecting on this and, even in October last year, they had a two-bed flat advertised at £850 per month. They had 84 applicants. The landlord took a tenant who offered £900, but of course universal credit is only £725. That is an example of the shortfall and the competitiveness of the market at the moment.
Professor Kemp: The local housing allowance rate was initially set at the median when it was introduced in 2008. Then in 2011 it was reduced to the 30th percentile, and the argument was that people on housing benefit should be in the lower part of the market. At that point, 25% of private tenants were on housing benefit. Then the rate was restricted. It was not increased in line with the 30th percentile from 2013. In 2016 it was frozen at that rate. Then in 2020 the Chancellor unfroze it, and the local housing allowance rate is now set at the rent assessed by the rent officer service for September 2019. It is set at that level.
If rents go up, the number of people able to afford private rental housing while on a benefit will reduce. If, as is happening now, rents are rising rapidly—and Zoopla has reported that asking rents for new lettings have increased by 10%—that puts the squeeze on people on housing benefit in terms of what they can afford and, as a result, they have to use the rest of their universal credit to cover the shortfall.
Sheila Haig: I will paint a more positive picture in Scotland. We have a significant fund for discretionary housing payments. Certainly in Edinburgh our refusal rate sits at around 8%, which is 2 percentage points less than nationally. At this time, we can support people quite well. As well as that, we have the Scottish welfare fund to support people who have income gaps for other essentials.
However, DHP will start to be squeezed now because landlords, given the mortgage increases, are putting their rents up as well. Scotland has a freeze on landlords increasing rents at the moment, but it is yet to be seen how sustainable that is. While, at the moment, our citizens in Scotland can probably access quite a bit more in terms of income than their counterparts down south, I am now concerned that DHP will be more difficult to manage. It will be more difficult to manage people’s expectations. Saying no and refusing more applications is likely to be the next step.
Q186 Selaine Saxby: Beyond LHA rates, what other factors make it difficult for benefit claimants to access affordable housing in the social and private rented sectors?
Ben Beadle: Briefly, it is back to that supply point. All the challenges we have at the moment—notwithstanding the rate that LHA is set at—come back to a fundamental lack of supply and to demand massively outstripping it. We have seen social homes being sold off under right to buy in England. Those have not been replenished.
We have been relying on the private rented sector to pick up the slack. We now find ourselves in a tricky position where the PRS is being kicked around as a political football. Do we like it? Do we not like it? The reality is that 20% of people are housed there.
Many things outside the LHA rate are conspiring to give that crisis of confidence to the very people who bring their properties to the market: mortgage rates, taxation, regulation. Regulation is not necessarily a bad thing, but property owners will need to have confidence. With the threat of rental reform making it more difficult, and with energy changes layering on extra cost, we have a crisis of confidence. That will not help the long-term trajectory and give people the homes they need.
Timothy Douglas: I was going to pick up quickly on Scotland. We have members across Scotland who do a lot of work in this area. The cost of living legislation has put a cap on rent rises and a moratorium on evictions, but an unintended consequence is that the cap does not apply to new tenancies. Therefore, in this climate of costs rising for landlords, we see landlords put up rents when that consideration was not an issue. Through covid, landlords and agents worked extremely hard with tenants to maintain tenancies and rents did not rise.
The consequence of the legislation in Scotland is that rents have been put under the spotlight for many landlords and agents. They raise the rents because they are concerned about anticipated costs in the future and they are also concerned about a housing Bill that will bring in a national system of rent control. That is an unintended consequence, just to pick up on the situation in Scotland.
Professor Kemp: The housing market and the private rented market is under a lot of pressure at the moment for supply and demand reasons. There is a chronic undersupply of housing in the UK, and there has been since the 1970s. We can argue about how much of it and what one should do about it, but there is.
Secondly, more recently, there is a loss of homes from the private rental market. Rightmove reported last year a substantial drop in the number of new lettings coming on to the market over the previous year. The anecdotal evidence—because that is all we have at the moment—suggests that pulling out of the market or switching to Airbnb, which is another factor, is ongoing.
Why is there a loss of existing homes in the private rental market? I can think of three reasons. First, Airbnb is siphoning off some. Most tenants in the private rental market are on six-month or one-year leases, which means that someone who wants to switch for whatever reason from the residential market into the Airbnb market can do so relatively quickly. The properties are quite liquid as an investment, because you can get rid of the tenant after six months or a year and decide to let under Airbnb if you are in a tourist area or in a city centre. That is quite an important point. The scale of it is unclear, but it is not insignificant. A previous witness gave some evidence about the size of that flow.
Another reason why supply has dropped is the tax increases that were introduced on private landlords in the 2010s, the explicit aim of which was to reduce investment by buy-to-let landlords in the rental market because it was argued that buy-to-let landlords were outcompeting first-time buyers. I don’t want to get into the debate about whether that is true or not, because the evidence is mixed, but those tax increases affect all landlords.
The number of people who move into owner-occupation because they feel there is less competition from private landlords is much smaller. There are 4 million private rental households and, yes, home ownership has increased a bit but not by that much. The measures have an effect in terms of reducing supply—that was explicit—but not so much increasing owner-occupation. The result is that it is more difficult for private rented housing to be commercially viable.
Before those tax increases were introduced, private rental housing in Britain, from a tax point of view, was more disadvantaged—if that is the right term—than in any other advanced economy I am aware of in terms of tax reliefs and so on. That has made it even less attractive compared with other countries. That is a political choice. It is not for me to comment on the morality of it or what one should do about it, but that is the case.
Secondly, the rise in interest rates seems to be pushing some landlords out of the market, because they are affected by it. Fixed-term mortgages are coming to an end. Many of them are on variable rate mortgages and quite a lot—I do not have the correct figure in front of me—are on interest-only mortgages. If you are on an interest-only mortgage, a rise in the interest rate will hit you more, because all your payments are on the interest, not on the capital. They have particularly affected those landlords.
Where they can, some landlords increase the rent. In the current market, it is possible to do that because supply is going down and demand is going up. Demand is increasing because of the post-pandemic return to the city. Some of the people who moved out are coming back.
Also, undergraduates and postgraduates are returning to Britain, so there is a big increase in overseas students. Some domestic students are going to university after they held off during the pandemic, because they did not want to learn online. I cannot blame them. It is terrible teaching people online. They have come back. Now we have delayed entry into owner-occupation because of interest rate rises.
“Perfect storm” is a terrible phrase and hackneyed, but demand is increasing quite substantially. That is why rents are coming up and supply is coming down to some extent.
Timothy Douglas: Can I pick up on the context of that? The NRLA believes that now is the time for the UK Government to do a review of all taxes impacting private landlords. It is not just the changes to mortgage interest relief. We have had the removal of the 10% wear and tear allowance, a rise in corporation tax, maintaining capital gains tax and higher rates of stamp duty. It is now 6% in Scotland on top of the transaction tax if you buy a private rented property. Then the Scottish Government still argue that landlords put up rents. There needs to be a review of that.
We have talked about how maintenance fees and charges have all increased, but across the UK the private rented sector is devolved. If the Scottish Government introduce a housing Bill later this year, that means in 12 months we will have had the Renting Homes Act implemented in Wales, the Private Tenancies Act coming in in Northern Ireland, the Renters (Reform) Bill in Westminster and a housing Bill in Scotland. For the private rented sector across the UK, it is unprecedented to have so much primary legislation implemented or on its way. That is all part of the picture and the challenge.
Q187 Nigel Mills: We have had quite a discourse around this. Do any of you have any solutions? We have rents going up, benefits not high enough to pay for it, risks from the point of view of tenants, but landlords seem to say there is no alternative. Interest rates are rising. What is the way out of this situation?
Ben Beadle: I might have a stab at that. We commissioned Capital Economics to do some research off the back of the interest changes that were made to landlords. My counterpart from Generation Rent referenced it earlier, in terms of people who switch from the private rented sector to the Airbnb sector. They do that because the tax environment is more favourable for offsetting your mortgage interest.
Capital Economics told us in its modelling that these changes have not only contributed to a £1.5 billion loss in Treasury revenue but have also resulted in 1.2 million fewer properties being available by virtue of these changes.
With some tinkering to the taxation environment for landlords and property owners, we want to encourage investment in the sector. If we bring additional homes to the sector, we need to look at how the additional rate of stamp duty might be foregone to encourage investment. We need to make it more attractive for long-term sustainable tenancies to be reflected through taxation by reversing those tax changes, rather than making it more beneficial to swap to the stag-do and hen-do brigade at Airbnb.
Q188 Nigel Mills: By “tax tinkering,” do you mean reinstate tax relief for mortgage interest?
Ben Beadle: Yes, but we are talking about supply. We absolutely accept that we need to see more social homes, but the PRS is taking on the role of the social provider for local authorities. We see, frankly, perverse schemes where local authorities almost compete with each other to get private sector landlords. Incentives are great, but we need a steady framework in which landlords and renters have confidence, making sure that we have a plentiful supply of properties in both the social and the private rented sector, and we need to make sure the taxation is appropriate. We look at the changes and see things have worsened significantly. Frankly, the only people who are worse off are the renters.
Q189 Nigel Mills: Are people letting through Airbnb not paying tax? Presumably they owe the tax and it is not being—
Ben Beadle: They are definitely paying tax, but a holiday lets exemption means you can offset your full mortgage interest. That is the difference. That has been restricted in the private rented sector for individuals. If you are an incorporated business, you can offset your full costs.
My point here is, as Peter said earlier, you are squeezing that part of the sector because you do not want it to grow. You want to turn generation rent into generation buy, but the research we did earlier this year with Chamberlain Walker shows the benefits the PRS brings to the country as a whole. If you want to turn gen rent into gen buy, you need a thriving private rented sector to make sure rents are low and standards are high to gain that social mobility.
Q190 Nigel Mills: Any other solutions for the problem of rent being too high and benefits being too low?
Sheila Haig: It is time for a review of LHA rates. They are unrealistic in a city like Edinburgh. The level of LHA makes that competition so much more. However, in Edinburgh, for people who are not on a benefit, the story is the same.
It is obvious to increase social sector housing, and Edinburgh has heavily invested in that as well, but building one-bedroom properties is not lucrative for builders. The size criteria can have an impact on that social sector as well. In Scotland, as I have said, that is fully mitigated for the time being, but that is an affordability thing as well. For me, an increase in LHA rates is absolutely required.
Timothy Douglas: Yes, we would agree with, as was mentioned in the first session, unfreezing and raising the local housing allowance rates and increasing them annually to keep up with market rents. There is certainly a discrepancy there.
Q191 Nigel Mills: If I remember rightly, 13 years ago the question was whether we were allowing landlords to put up rents because they knew the housing benefit would follow it and we were almost chasing rents up the tree. Is there a risk of this going the wrong way?
Timothy Douglas: I do not see that, certainly from conversations and data from our members. Where our member agents are working with claimants, they do a lot of work to support them. It is certainly not a case of doing it just to get the returns through the benefit.
That was the next point I was going to make on the discretionary payments. We see some local authorities applying them and some not. I spoke to an agent in Wales, based in Cardiff and working across south Wales, who is dealing with four local authorities with four different ways of doing things. That disconnect is also important. Agents are doing a lot of work to engage with the team leaders in those local authorities to support claimants and tenants.
Q192 Nigel Mills: Mr Beadle and Mr Douglas, I am guessing that you are not fans of rent controls.
Timothy Douglas: No.
Ben Beadle: No, we are not. They have failed everywhere they have been, and they do not deal with the substantive issue at hand. If we are concerned about rents rising, which we all are, this is all within our control. It is about increasing the supply out there. The Renters (Reform) Bill will bring forward measures on unfair and above-market rent increases. That is right and proper, but rent controls have failed everywhere and we absolutely reject that as a palatable solution.
Q193 Steve McCabe: That is quite a sweeping statement, “failed everywhere.” Do you have substantial evidence to support that? I know there is a lot of criticism of them, but there are examples of them being used, largely temporarily, quite successfully.
Timothy Douglas: The Republic of Ireland introduced rent pressure zones. Of course, that squeezed out existing landlords because those existing landlords were offering below market rents. The rent controls were introduced on existing rents and, of course, new entrants could enter the market on higher rents. The good landlords, who were offering below market, left.
There are other examples. In San Francisco, if you rent in a building constructed before 1979, there is a restriction on the rent. What does that do? It means that labour market mobility stalls because people on those capped rents stay put and do not take advantage. The PRS does not offer the flexibility that it needs for people to come and go. They are two examples where it is simply—
Steve McCabe: That was 44 years ago.
Timothy Douglas: Okay, Rent Act tenancies as well, but what has happened to those properties? There are Rent Act tenancies in London, but those properties look great from the outside but they are diminished inside because there is no market to update and upgrade them because the rents are capped.
Nigel Mills: You almost want your tenant to leave because, once your tenant leaves, you can—
Timothy Douglas: Yes, and there has to be an element of landlords and agents—the good people who do a good service for a lot of people—being treated as housing providers. We advocate at Propertymark for the regulation of letting agents. There should be minimum requirements to operate. Outside of Scotland and Wales, that is not the case. Lots can be done outside of rent control.
Q194 Nigel Mills: Professor Kemp, you could probably do a whole seminar, maybe even a whole semester, on this.
Professor Kemp: On the question of rent controls, there is enormous literature. What is the impact of rent controls? The answer is: it depends. It depends on how you design the rent control measure. Is it more market conforming or is it the opposite?
If you have a rent freeze, as they have in Scotland, that is not a great idea. They introduced one in Berlin and the number of new lettings coming on the market fell by 60% in 12 months. But that is a rent freeze. It is crude.
Rents going up only in line with average earnings or the consumer price index would have less of an impact, but it would have an impact on new supply. It has an impact on existing supply. It has an impact on the condition of properties and landlords’ incentives to invest.
The trouble with temporary measures is they tend to become permanent. When we introduced rent controls in 1915—a long time ago—it was meant to continue until six months after the war. We got rid of that only in the 1988 Housing Act. It is quite difficult. It will be interesting to see what happens in Scotland because they have already extended this rent freeze. If one introduces some kind of soft rent control, maybe, it depends on how you decide to do it.
Timothy Douglas: They removed it in Scotland for the social rented sector, but not for the private rented sector and did not engage with the private rented sector in the process.
Professor Kemp: It is a good job rents are not linked to inflation. That is all I will say.
Q195 Steve McCabe: You will be delighted to know that I want to leave rent controls behind. Would you identify any particular groups of claimants, in your experience, who you think find it more challenging to find suitable or appropriate accommodation than others?
Nigel Mills: Sorry, Chair. I forgot to declare that I rent out a property. That is probably a relevant interest.
Steve McCabe: I had better declare the same.
Chair: You are right. Those should be declared. Thank you for doing so.
Ben Beadle: Prospective members. That is good.
Steve McCabe: Give me the form.
Ben Beadle: In terms of particular groups, we heard from the last session about younger renters. I accept that argument, by the way. They are singled out in terms of the lower rate of local housing allowance.
My comments would go back to the overall supply and demand point that I made earlier. You want this safety net to be reflective of the market, whatever your need is. I get that people have different needs, but the point is that at the moment, with a three-year freeze, the amount of allowance that people receive, almost irrespective of their demographic or characteristic, is insufficient. That is why we are pushing so hard on dealing with the supply of homes and all the things that affect that, like taxation, mortgages, standards and things like that, to make sure we have a plentiful supply of homes.
As my colleague Tim said, we saw during covid that landlords bent over backwards. I remember stories in London of rents going down 20% or 25% as people did their mass exodus, for obvious reasons. Frankly, nobody was getting the violins out for the landlords and I was not expecting them to, but that is the reality. When demand changes, rents move with it. Landlords do not set the market.
Nigel has gone, but he asked about rent increases and things like that. ONS figures show that landlords are actually, dare I say it, bad at putting their rents up in tenancy. Over two thirds leave rents as they are because they would much rather work with somebody they know and trust, and with whom they have a good relationship, because we have a better standard of tenant satisfaction than the social sector.
The problem we see at the moment is, as people move on, rents are being reset when they come to the market. That is if they come to the market at all and are not sold. That puts pressure on everybody. I would not single anybody out, in answer to your question. It comes back entirely to supply and the confidence around operating in the PRS.
Q196 Steve McCabe: I appreciate that, and I understand the point you make. We heard a lot in the earlier session about younger people.
As a constituency MP, I come across a lot of people with disabilities who are in inappropriate or unsuitable accommodation, or who find it difficult to access suitable or appropriate accommodation. Do you recognise that yourselves?
Ben Beadle: Yes. We ran a campaign on this last year to broaden members’ views on some of the schemes that are out there to encourage accessible amendments to be made to properties. As I am sure you appreciate, these properties are difficult to come by. If you get a willing landlord who knows where these grants are, and things like that—and grants are out there—you have a tenant who stays for a long time. The landlord values that over anything else.
I can send you details of our campaign, but we are very keen on this because we see the responsible private landlord as part of the solution.
Q197 Steve McCabe: That would be helpful. We are keen to know what else you think could be done by private and social landlords to help people with particular needs access appropriate accommodation.
Sheila Haig: One group that is disadvantaged is what we call the working poor, people who maybe receive a small amount of partial benefit or no benefit at all, and they are really struggling. If they do not get any housing benefit or universal credit housing costs, they cannot access DHP either. Whether it is a case of looking at allowances and tapers to bring them in line with universal credit, particularly for housing benefit—that was mooted at the last session—a whole review of encouraging people into work needs to be done because there is certainly a disadvantage at the moment.
Timothy Douglas: Of course there is a disconnect between vulnerable claimants and vulnerable tenants within the social rented sector in receipt of universal credit and those in the private rented sector, in the sense that social housing managers can liaise directly with DWP about the benefit claim on the individual’s behalf, which private landlords cannot do from the outset. There is a disconnect there when trying to support vulnerable—
Sheila Haig: Only if they have a mandate. Only if the tenant allows it.
Timothy Douglas: Yes, exactly. There is still a process to go through. The shared accommodation rate was talked about in the earlier session. Statistics show that more younger people rent in the private rented sector. Whether that rate should be suspended to support them, that is certainly the feedback we have had from our members.
Finally, we have engaged with the Scottish Government and the UK Government on Ukrainians settling in the UK and the Afghan resettlement scheme as well. They come to our organisations to help them with property and to promote that information to agents, and the NRLA does the same with landlords. Of course, the LHA freeze affects all Governments’ ability to support people from Ukraine to settle in the UK.
A lot of work is ongoing with local authorities to set up guarantor schemes, but of course that is mixed across the country. There is a willingness for the sector to engage with those communities that come to the UK, but it is very difficult in an extremely tight and competitive market.
Professor Kemp: The people who struggle in terms of their rent, to put that in context. Three quarters of people responding to the English housing survey say that they do not have difficulty affording their rent, but a quarter does. You are mainly talking about young people, older people—7% of private tenants are older people—people on housing benefit and people who are on low pay but not on housing benefit. If you look at them, in particular if you look at the bottom 40%, the proportion of people paying more than 30% of their income in rent is high.
From the analysis I did of the 2019-20 English housing survey, nine out of 10 people in that bottom 40% who are private tenants paid more than 30% of their income in rent. That is what some people use as a benchmark of affordability. It is a bit arbitrary, but that is what they do. If you look at young professionals, a lot of them in London and the south-east pay quite a high proportion of their income in rent, in some cases over 50%.
We are hearing about problems with affordability precisely because it now affects young professionals in the market, and that reflects the imbalance of supply and demand.
Q198 Siobhan Baillie: This is a fascinating debate. Ben, I cannot remember a surgery—I do them every week or every couple of weeks—when I have not had a landlord from Stroud come to me who is about to give up, being incredibly worried about all the different changes and the culmination of the different policies. They are single property-owning landlords. Equally, I have had renters come in who cannot find properties. I also see letting agents, brilliant people who are trying to work through all these issues. It is great to hear from all you today.
Of your 100,000 members, how many are landlords who own one or two properties? Do you know what the proportion is? The demonisation of landlords when the bad landlords hit the headlines skews the narrative. I can see that the Renters (Reform) Bill will be incredibly hot and difficult to manage in this place, because there is no understanding of the truth of the real market, if that makes sense. What are the smaller landlords?
Ben Beadle: Some 43% of people have one property. That is a significant issue for the reasons that you highlight. We have an advice line to support members. For the last few weeks, since the Renters (Reform) Bill, we have been receiving 3,000 calls a week from landlords because everything is spooking them, to be honest with you, on a whole range of matters. These are not bad landlords. We know there are bad landlords in the sector, but there are good and bad of all sorts.
We deal with responsible people who look after their tenants and provide good accommodation. We do not want to lose that. However, I am afraid that the forecast is not terribly sunny. Quoting some of our research, in the first quarter of this year 33% of private landlords in England and Wales said they planned to cut the number of properties that they rent out, in keeping with what you hear at your surgeries. We have been tracking this sentiment for 12 years. It is at its highest for 12 years. We have demand at a record high. Some 67% of landlords said demand for properties from prospective tenants is increasing.
For all the reasons we have articulated, local housing allowance is one part of it and landlords will get beaten up for shying away from LHA. There are lots of issues around not just the amount that LHA is set at but how landlords and the universal credit system are engaged with it. I have tales of woe from members who have waited 16 weeks for an answer on an alternative payment arrangement with no reply.
I have another one. This lady has made four attempts at an online application for an APA without any response. There are system problems and maladministration. The independent case examiner has written back and accepted terrible delays, maladministration, rudeness, unpleasantness and the whole shebang. All the DWP was asked to do was say sorry, even though that landlord lost several thousand pounds.
I reject any accusations of discrimination when it comes to local housing allowance or benefit claimants and say—simply put—that the system is not fit for purpose.
If you add that to rental reform, energy, taxation and mortgages, bear in mind that, as bad as mortgages rates are for homeowners, it is 20% worse for landlords with the tax changes,. I am not expecting violins but, ultimately, the tenants suffer.
The question will be: where do these people go? There is not any social housing. We have a crisis of confidence all the way across the sector. They go into crappy temporary accommodation—excuse my French—that costs the taxpayer a lot of money. Surely we are better than that.
Q199 Debbie Abrahams: Briefly, Ben, I absolutely recognise what you say. I am sure my colleagues are good landlords, but there are also not-so-good ones. I can think of a constituent in his 80s who had been in a property for about 20 years and was served with a section 21. It took a lot to try to get him rehomed at that age.
I am conscious that there have been nearly 7,000 no-fault evictions in the first quarter of this year, up 16% from last year. Given the position that we are in with interest rates, mortgage rates and yet-to-be-determined buy-to-let agreements around how the mortgage charter will cover that, what are your estimates of how it will affect section 21 notices?
Ben Beadle: First and foremost, we want to keep people in their homes. I caution against falling into the trap of no-fault, because we have to look back at the reason that triggers a section 21 notice. Just because we do not have to give a reason does not mean that there is not one. It could well be that the landlord is selling. That is a perfectly legitimate reason, and landlords will be able to do that under the Renters (Reform) Bill. The Bill will not help renters in that regard.
Q200 Debbie Abrahams: Yes, but on this question, what do we anticipate? Perhaps this will help to focus the Government’s mind on the vagueness of the mortgage charter and buy-to-let.
Ben Beadle: Buy-to-let mortgages are not part of that charter. A footnote says it is not applicable.
We know that 85% of landlords have buy-to-let mortgages on an interest-only basis. Those who are highly leveraged will be up a well-known creek without a paddle, I suggest. They will be looking very hard at their properties and their returns, and not being able to make ends meet.
On the forecast, I am trying to find the figure in my notes. Modelling by Capital Economics found that if the Bank of England’s base rate were to peak at 5%, which it now has, and remain above 2.5% until the end of 2027, up to 13%, or 735,000 homes across the UK private rented sector, could be lost compared with 2021. This would lead to a loss of £1 billion in income tax and corporation tax per year for the Treasury. I am normally a glass-half-full man, but it is difficult to see a positive outlook.
That is why I say that a lot of these things are multifaceted. It is not about tenants and landlords. It is a homogenous group. Tax, mortgages, supply, local housing allowance and the administration thereof all need to be working to give those participants confidence.
Q201 Dr Ben Spencer: I will follow on the theme of what the sector can do,, linking with DWP, around trust in benefit claimants.
I will declare an interest. I have received support from those who are interested in this area, and I draw attention to my entry in the register of interests.
Timothy and Ben have both mentioned the difficulties and challenges in having interaction, or no interaction, with DWP, particularly around APAs. As a Committee, we have previously commented on the importance of an effective APA system.
What would you like to see change going forward? As a corollary of that, is there a tension or a danger with private sector landlords, in particular, getting more involved in direct engagement with the DWP on behalf of renters?
Ben Beadle: Yes, we would like that. At the end of the day, we want to sustain tenancies. I have tales of woe where universal credit will not speak to landlords who are being overpaid thousands. They are saying, “We have money we are not entitled to. How do we give it back?” “We cannot talk to you. We need to talk to the tenant”. Good luck with that.
This big bureaucracy is not helpful. Not everybody is a criminal. Not everybody is out to rip people off. We want to encourage those responsible landlords to have a positive working relationship with the universal credit system.
We want to see changes with universal credit. An end to the five-week wait for renters would be a good start. Why do we make the most vulnerable in society wait five weeks? I have heard Iain Duncan Smith, the architect of UC, say that it can be done within a matter of days. Why do we not do that? Why do we set people up to fail? Why do we start people off in arrears? Why do we have that loan at the outset? Why not convert it into a grant? If we trust renters to receive the money themselves, why do we not trust them if they say, “We want to pay the landlord directly at the outset”?
It comes back to your point, which is the vilification. It does not help the rhetoric around this stuff. We need practical solutions, and we have plenty.
Timothy Douglas: I certainly agree with that. The five-week wait is an issue and has changed agents’ and landlords’ perception of universal credit and renting with benefits. We advocate turning the loan advance into a grant to help those most in need, and they can have that money straightaway. Also, we need greater flexibility. Yes, we have the choices in Scotland with the split payments, whether that is monthly, fortnightly or weekly. We need that flexibility in terms of the rent continuing to be paid.
As a sector organisation engaging with the Department for Work and Pensions, until 2019 we had a PRS engagement group. That stalled due to the pandemic, but it was a useful forum that met with landlord groups, the NRLA and Propertymark to engage with officials quarterly. We wrote to the Secretary of State, Mel Stride, about that in January. We had a response in February to say, yes, they are conscious that the engagement has dropped.
We had a meeting with officials and a follow-up email to say it is still in the pipeline. We hope that forum will reopen and allow us as sector organisations to feed in these issues. We did a lot of work around digitalising the UC47 form. The tech people from within the Department would come and give presentations. Landlords and agents would say, “That will work on application, but this will not.” We were able to work with DWP work coaches in localities across the country to engage and solve those issues. We hope that engagement with the Department will start up again, and we have pushed for that.
Sheila Haig: I have reservations about unfettered access to information. It would have to be very regulated and very controlled. I have been on the end of that type of conversation before. This is about dignity and respect for tenants. Just because they are on benefits, it does not dictate that they will not pay their rent. Any conversation around extending that information to someone has to be with the absolute consent of the tenant, and following a huge discussion about what they are doing there.
If it is to work for universal credit, a tenant’s conversations with their work coach need to be extended, because they get 17 minutes per session. If you are working with someone and you need to help them sort out their rent, you will need more than 17 minutes. Maybe it is a resourcing issue for jobcentres that means we could fix the problem, rather than offering free access to information as a solution
Timothy Douglas: In Scotland, letting agents are qualified. We have landlord registers across Wales and Scotland. There is a training requirement in Wales and Northern Ireland. Through the Renters (Reform) Bill, there are potentially avenues to register and regulate agents and landlords to ensure they can step in and get the housing element directly paid on the trusted partnership basis that we see in the social rented sector. We need that option.
Ben Beadle: To come back, we do not need unfettered access to the universal credit system. We just need better access.
I have one story from a member who contacted UC to get an APA. Universal credit required the tenant’s date of birth, so it was the other way. We were not asking for it; it was required. The landlord, for whatever reason, was not able to provide it. Even though it is not information that is regularly kept by the DWP, as I understand it, it meant a significant delay to resolving that particular issue. The tenant was four months in arrears. We know that hurts individual landlords.
We do not want unfettered access, but we want reasonable dialogue to resolve some of these issues, because we might have been able to resolve that problem.
Q202 Sir Desmond Swayne: I should declare my registered interest as a private landlord.
How can we improve the performance of the Valuation Office Agency in calculating local housing allowance and, also, the data that it gets from letting agencies and private landlords? Should we impose another requirement on them?
Timothy Douglas: I suppose, with the VOA, the negative or the challenge is that the collection is voluntary. Therefore, they can only use what they have, essentially. As an organisation, we have engaged with the VOA to ensure flexibility in how agents provide that information.
To be fair, they have done a lot of work to ensure the information can be provided through CRM systems, through direct contact, through a regional officer, though a simple form or by visiting a branch. The VOA has done a lot of work. It now has 10 hub managers across England who attend all our events and conferences. We have put together a pack to encourage agents to provide that information because it is, ultimately, vitally important and feeds into that process.
Using the landlord registers across the UK—Northern Ireland, Scotland and Wales—and potentially the Renters (Reform) Bill, to collect more information is a potential option, but whether they mandate it via registered and regulated agents would be an issue for the Government.
Ben Beadle: I think the answer to that question, Sir Desmond, is the property portal that is mooted in the Renters (Reform) Bill. We are not talking about the colonel’s secret recipe when eliciting rent data from landlords. I would not be worried about providing it. I would be worried about providing other types of data, potentially, but I am not worried about providing rent data.
It is slightly irritating that we have had tenancy deposit protection in place since 2007. When you register a deposit, you are always asked how much your rent is and how much your deposit is. We are creating a new scheme to collect data. The data is already out there. The data has been out there since 2007. I used to work for one of the deposit schemes, so I know it is there. I suspect we probably need to make better use of the data that we have, rather than creating new bureaucracies that alienate landlords and letting agents.
Q203 Sir Desmond Swayne: Are the broad rental market areas that designate the different local housing allowances properly drawn up? Are they effective, or are they all over the shop?
Timothy Douglas: It has been raised with us that the size of the areas can be a challenge but, from conversations with the VOA, changing all 150-odd areas would take a huge amount of resource and consultation. If you look at the current requirements where a rolling programme of regular monitoring can be done by the Government, in terms of significant changes to the proportion of facilities and changes to transport and housing times, you would probably be better off linking those reviews to local plans when they are developed by local authorities—ultimately, they are the ones changing facilities and infrastructure in an area—rather than tinkering with the existing system, which we understand would take huge resource and consultation.
Q204 Chair: Professor Kemp, do you have any comments on the way the VOA does its job of working out the local—
Professor Kemp: I have one on that and one on the broader rental market areas. Rent officers look at rents on the stock of lettings. That is fine but, if you are looking for a new property, you have to pay the rent on new lettings. If you use the rent officer data, which the ONS uses, rents over the previous year have gone up by 4%.
However, if you look at Zoopla’s data, which is about what landlords ask for properties coming on the market—which is not necessarily what the landlord gets these days, as that is somewhat higher because of rising demand—it has gone up by 10%. The rent officer service says it is 4%. Zoopla, which is in the market and has a massive database, says it is 10%. In a sense, the data that had been used to set the 30th percentile is not the right data. Zoopla and Rightmove might be persuaded to provide data that is more—
Timothy Douglas: That is only advertised rents, not agreed rents.
Professor Kemp: It is not agreed rents. It is advertised rents and—
Timothy Douglas: Agreed rents is what we want.
Professor Kemp: Yes, but where do you get them from? Would you rather say—
Timothy Douglas: The landlords and agents. The deposit schemes’ existing data is out there.
Professor Kemp: There seems to be a problem at the moment. Even leaving aside who you get it from, the rent officers’ data is about the stock. Whereas the people looking for rental housing now have to pay what the rental market suggests, and rents have gone up by 10% if you look at Zoopla data but only 4% if you look at VOA data.
It will not help you that people who already have a property are paying much less, because you have to pay the rent that is achieved. Because far more tenants are now chasing every vacant property, the pressure is upward. People have to bid against each other to secure a property.
Timothy Douglas: On that point, a conversation could be had with the VOA on how it does that. As I understand it, the data it collects is new rents, existing rents and renewals, and it puts those together. The VOA might consider separating that information to provide a more accurate picture. I understand that it could do that, but it would not be able to do it instantly.
Q205 Chair: Mr Beadle, you suggested that the property portal in the new legislation might provide another source of data. Would that overcome these difficulties?
Ben Beadle: It might, but I put it to you that the data will also be provided to the deposit scheme as the deposit is registered in any event. There is an opportunity through the property portal, because I see the property portal as a way for good landlords to prove that they are compliant and for tenants to have access to the information they need. I have no issue with providing that rent data.
The question would be how it is maintained and kept up to date, but that is a whole different conundrum.
Q206 Chair: Can we go back to Professor Kemp’s point about the areas?
Professor Kemp: They are rather broad. There used to be about 300, but there are now 150. They are supposed to be areas within which it is reasonable for a housing benefit claimant to search for accommodation, work, shop and all the rest of it. Maybe it works in some areas, but in certain areas it does not—if you look at York and Oxford, and it is probably the same in Cambridge. However, rents in the villages around Oxford are much lower than they are in the centre. In the centre, they are very high indeed.
Is that appropriate when the average used across the area will be lower because you have all these villages and small towns surrounding it? Rents are much lower there because you have to commute, but who can do that commuting? If someone is on housing benefit, they are less likely to have a car. Commuting into Oxford is quite difficult. I am sure the same is true of Cambridge and York. It is quite broad.
Then, if you look at Blackpool, some of the surrounding areas are rather wealthy, much wealthier than the centre, and you have the opposite effect. It inflates the broad rental market area allowance.
It would be better to revert to the original, which was based on rent levels, submarket levels. Rent officers were supposed to work out the rents in particular areas. It would be more finely tuned and you would get away from this inflated or underinflated rent situation.
Q207 Chair: Can I put some final points to you in closing the discussion? First, Mr Beadle and Mr Douglas, you have referred to tax changes that make things harder for private landlords. Talk us through these changes and when they took effect. Are they new?
Ben Beadle: Specifically, the principal concern is around mortgage interest relief for individuals. That was brought in in 2015 but phased over four years. It fully came into impact in 2021. It means that you cannot offset your full mortgage interest against your tax return. When we see mortgage rate increases, yes, they apply to everybody but, depending on your tax status, it will cost you 20% more if you are an unincorporated buy-to-let landlord. That is problematic because, effectively, you could be paying tax on your turnover rather than your profit.
I fully accept that not every landlord has a mortgage. About 60% have a mortgage. These are all multifaceted things. Tim referred to the wear and tear allowance. You used to get a 10% credit on wear and tear—
Chair: When did that go?
Ben Beadle: I would have to double-check. I think it was 2020.
Professor Kemp: It was all part of those changes that George Osborne introduced.
Ben Beadle: It was, yes.
Professor Kemp: You now submit your evidence on what you do. It is messier but it is perhaps more accurate. The change in tax relief, which has been converted to a tax credit, increases your income. Therefore, it can push you up, if you are at the margin between one tax band and another. You can also pay tax even if you are not earning any money, because you are being taxed on turnover. I don’t know another investment where you can be taxed on turnover. It seems strange.
Secondly, with stamp duty you pay an extra 3% surcharge if you buy a property. The idea is to make it less competitive to buy properties for rent. Then you pay an 8% surcharge. This is in England, by the way, not Scotland.
Ben Beadle: England and Northern Ireland.
Professor Kemp: You pay an 8% surcharge on capital gains tax. When you buy, you pay more. When you sell, you pay more. When you operate, you pay more. Taken together, they are quite considerable. I am not into politics, but it sounds to me like an un-Conservative policy, to be honest, but do not quote me.
It is serious. We need a private rented sector, so we need to have a commercially viable private rented market that can provide secure, affordable and decent accommodation. We are some way from that. I am talking about the bottom end of the market.
Timothy Douglas: The key to policymaking is that seven Government Departments in Westminster interact with the private rented sector, and we continually need them to come together to review these issues. Then the property tax element is devolved. As we were saying, it is 3% to buy a buy-to-let in England and Northern Ireland. They have added 1 percentage point in Wales, so that is 4%. Then you have 6% in Scotland, but of course the tax system and all those changes affect all landlords UK-wide. We have to interact with that devolved nature of policymaking but across the Departments in Westminster as well.
Ben Beadle: That explains the Airbnb side and the holiday let side, where you do not have those exemptions. Rather than repeat these draconian measures on Airbnb, we should encourage investment in the sector. From some of what we are talking about today on local housing allowance, the people at the bottom of the market are struggling and the gap is widening.
Q208 Chair: Presumably, the Treasury never particularly intended to support Airbnb, did it?
Ben Beadle: No, but it deliberately set out to cool the market. It has been a massive success at cooling the market, and look where we are. Respectfully, we need more homes. Having a punishing tax regime helps nobody.
Q209 Chair: You gave us some awful examples a few minutes ago of landlords asking the DWP questions and not getting replies. How common is that experience? Hopefully the DWP does better than that in some places, but what is the general experience?
Ben Beadle: This is one of the things that puts people off, frankly. I liken it to staying at a dodgy hotel or going to a dodgy restaurant. You probably would not go back. While I am sure there are good examples out there, there are too many bad examples. I will write to the Committee with some of those examples, if that is okay.
Chair: That would be of interest, and also some sense of how widespread this is.
Ben Beadle: Indeed.
Q210 Chair: Finally, do things occur to you that the DWP could do to allow landlords to be more supportive to tenants than they can be at the moment? Beyond what we have already mentioned, does anything occur to you?
Ben Beadle: It is about increasing engagement, to be honest. We should not look at landlords as problematic customers, which is how a lot of landlords feel at the moment. We want to help our tenants. We want to help our tenants set up alternative payment arrangements and all those things, but we need them to engage with us. It would be helpful if the Committee could encourage the DWP to be more collaborative in their working with the users of the scheme.
Timothy Douglas: I echo that. That builds on the stakeholder work we have pushed for the Department to re-engage on with the representative body. For the agents on the ground, communication and relationship building are key.
Professor Kemp: What can it do? It costs money. We have a five-week wait. The idea was that it is supposed to mimic work, but you do not have to wait five weeks to get your first paycheque. The fact is that most claimants have little or no savings. Going five weeks means they are in danger of getting into rent arrears. That is a problem. That is one reason why landlords will not let to them.
On top of that, some areas have quite considerable delays in processing claims, so it is often more than five weeks. You are talking about people who have no savings or very little, £50 or something, having to struggle and having to wait. Of course, this is a big business risk for landlords. When will they get the money and how much will the rent arrears be? Ending this five-week wait would be helpful.
Automatically uprating the local housing allowance with the 30th percentile, as it used to be—30% of private tenants are on housing benefit, so it is not unreasonable to have that—will help the relationship between landlords and tenants.
Finally, the tenant is the claimant, not the landlord. The confidentiality issue is quite important. The reason why we pay, as a default, the tenant and not the landlord is about encouraging responsibility, knowing what your rent is and looking for accommodation. You are the person who should get it unless there are payment problems, addiction problems or people who cannot manage their money.
In that debate, I understand where they are coming from, but you are talking about alternative payment arrangements, which is different from the generality. You need to make that distinction.
Sheila Haig: As I said earlier, the DWP needs to work more closely with tenants. However, it is not just about universal credit, housing costs or housing benefit. It is about all benefits and maximising their income so they are in a position to meet their liabilities.
One of the most underclaimed benefits is council tax reduction. In England, there are various schemes and it is a more complex landscape, but certainly in Scotland, even with the simplest joined-up scheme, we see this. Universal credit is probably partly to blame. It is a tick box, and that is your application made. People are not encouraged to do it, because we are not seeing CTRS going in the right direction.
The DWP needs to broaden its horizons in supporting people to access total income, rather than just the one specific benefit they are dealing with.
Chair: Thank you all very much indeed for an interesting and helpful session. That concludes our questions to you and concludes our meeting.