Wednesday, 27 July 2016

Direct payment pilots extended to test bedroom tax

The Department for Work and Pensions has extended pilots testing the direct payment of housing benefit to tenants to assess the impact of the bedroom tax.

The six schemes that are assessing the effect of paying housing benefit to tenants rather than landlords under universal credit will now run until the end of the year, extending the timeframe from a year to 18 months.

Welfare reform minister Lord Freud said extending the pilots would help the government understand what measures are needed to ensure rents get paid.

However, Lee Sugden, executive director of resources at Wakefield and District Housing, told Social Housing’s finance conference today that the housing association’s pilot had been extended because of the bedroom tax and other welfare reforms.

The latest results from the pilots, which have been released today, show the rent collection rate among the 6,168 tenants involved in the schemes was 94 per cent. This is up slightly from 92 per cent after the first four months of the pilots, but rates vary between the pilots from 91 per cent to 97 per cent.

The figures also show payments for 1,258 tenants have been switched back to landlords.

One of the key points the government wants to understand is at what point payments should switch to landlords. The DWP recently announced that wider universal credit pathfinders would switch payments if a tenant runs up two months of arrears, but the department said this would not necessarily be adopted more widely.

The bedroom tax, which reduces housing benefit payments for working age social tenants who are deemed to be under-occupying their homes, was introduced at the start of April, and some housing associations have already raised concerns about increasing arrears resulting from the penalty.

South Yorkshire Housing Association has said around half its affected tenants are not paying the penalty, and yesterday Nick Atkin, chief executive of Halton Housing Trust, said around 18 per cent of its 920 tenants who are under-occupying have not paid.

Lord Freud said: ‘The demonstration projects show the majority of claimants are managing their own rent – even through Christmas when budgets can be tight.

‘But we have always been clear that there needs to be protection for both tenants and landlords if people build up arrears and to target help at those people who should not be placed on direct payments.

‘The projects are helping us to develop and set this protection and that is why we are extending them for six months.’

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