Another blown for Universal Credit tenants struggling to pay their rent

This one slipped under even MY radar.

The Department for Work and Pensions (DWP) announced on 10th April that Universal Credit rent arrears deductions have been suspended amid the coronavirus pandemic.

Third-party deductions, which typically see claimants have money they owe taken from their monthly benefit allowances, will be scrapped until 10 May.

Universal Credit claims have increased sharply as Covid-19 batters the economy. 

More than 1.4 million have applied for the benefit in recent weeks, according to the government, which recently took the decision to suspend evictions until June. 

A spokesperson for the DWP said: “We have received an unprecedented number of new benefit claims and have streamlined our operations to make sure people get the support they need during this time.

“As part of this, we have temporarily paused third-party deductions from [Universal Credit] – these will recommence on 10 May.

“We are in the process of explaining the changes to claimants via their online journal and to third parties, including housing providers who collect arrears via this method.”

The question is, How will this effect tenants who have been granted suspended possession orders on terms they pay the arrears and were having these deducted directly from their benefits.

Although this is only suspended for 1 month, this could have a huge impact on the tenants who have yet to be informed ( as DWP have said they are still in the process of informing both claimants and landlords) that the direct arrears payments have been stopped and are not aware they need to pay the deducted amount themselves 

With courts suspended until at least the end of June, will this impact on the number of eviction applications that are submitted to court?

Sadly the DWP have not thought this action through and risk jeopardising tenants security of tenure in their homes through no fault of their own

Source LandlordToday.

Don’t Panic!!!! Rent arrears see minimal increase since Lockdown

Many tenants have been laid off, furloughed, or have seen their incomes plummet because of the response to the coronavirus outbreak, and yet there has only been a 2% increase in late rental payments, according to new research. 

Given that many people have lost jobs or income because of the coronavirus pandemic, there were concerns that a higher number of tenants would not pay their rent, and so the findings from the study by property technology company Goodlord will be welcomed by some landlords. 

Goodlord analysed payment trends from a representative sample of 20,000 UK rental properties. 

In addition, only a small fraction of landlords are processing rental insurance claims, indicating that they are not yet out of pocket.
Since March 11th, there has been a modest increase in late payment behaviour - 2% more properties than usual still owing rent after seven days. This is an increase from 4% to 6%. 

Likewise, claims from landlords against Rent Protection insurance policies remain comfortably below 1% of rented properties covered. 

However, 84% of the 124 letting agents surveyed have reported confusion amongst tenants, with many not realising they remain under obligation to pay rent.

Of those surveyed, seven out of 10 - 70% - said that they have agreed payment plans with less than 10% of tenants so far, further indicating that the financial impact of the pandemic has yet to impact the ability of most tenants to meet their rental obligations. 

Tom Mundy, COO of Goodlord, said: “Despite only being a month since lockdown began, the late payment figures for the rental industry are so far fairly steady. They show that the overwhelming majority of tenants are still able to meet their obligations and we believe the government’s furlough scheme will no doubt be playing a key role in this continuity. 

“At the same time, agents and landlords are gearing up to offer more support in the months to come. Many agents, along with their landlords, are thinking about how they can offer flexibility, support, and guidance to tenants who might start to struggle.”

Source Landlord Today  

Til death do us part - But AST isnt the end

Death isn’t something we like to think about or even talk about the majority of the time, but as landlords this is something we may need to deal with at some point.

Sadly, the probability of having to deal with this situation has increased with Covid-19 effecting so many people.

In my professional capacity, I have had to deal with over 12 deaths of tenants, occupants or residents in all types of situations, from suspicious deaths, murders, suicides to ill health and old age.
But the key facts remain the same and that is how to correctly deal with the death of your tenant.

We will, for the purpose of this article assume the tenant has passed from natural causes and has an Assured shorthold tenancy (AST).

There are 2 main scenarios for you as a landlord to work through and I will address each in turn, so let’s start with the easy one.

Scenario 1. Tenant passes away and there are Next of Kin ( NOK)

The important thing to remember is that under English law the AST does not end on death of the tenant, but remains an active tenancy accruing rent until it is legally ended.

The first thing  you must do is contact the NOK and find out if there is a Will and who the executor is, from this point onward it is best to communicate direct with the executor rather than the NOK.

Next, you need to arrange for the tenancy to be ended, this can be done in 4 ways.
• Notice to quit from the tenants estate
• You serve a S21
• You serve a S8 using mandatory ground 7
• Deed of surrender
Realistically options 1, 2 & 3 are the best because they will limit the liability for rent owed and allow a practical timeline for you to get the property back in your possession.

Rent & Rent arrears
While the tenancy is active rent will continue to be due, the liability for this rent rests with the tenants estate until the AST is ended, this is why it is in everyone’s best interests to end the tenancy as quickly as possible, to minimise the estates liability, but also to minimise the debt owed to you, in case the tenant has little or no value in their estate.

Security deposit
At the start of the majority of tenancies, a security deposit will be taken and registered with one of the 3 deposit schemes, this deposit remains the tenants money at all times, or in this situation, it remains the money of the tenants estate and must be returned to the estate accordingly.
You will need to process the deposit in exactly the same way as if the tenant were still alive, so carrying out a check out inspection and requesting deductions for any damage or dilapidations or of course rent arrears.
This is another key reason why you need to have opened communication with the executor early on in the process, as it is likely NOK may not want to discuss or accept any deductions you may wish to make from the deposit.

Clearing the property of possessions
This can sometimes be a delicate situation to have to approach with grieving relatives. The fact that you need the property emptied so you can relet balances with the family’s  time to grieve and prolong a heartbreaking task.
As a guide I would suggest following local authority and housing associations protocol and giving the family 14 days to visit the property take what they wish and surrender the property back to you.
This will need to be communicated with the Executor of the Will incase there are any specific items that are addressed in the Will and need to be dealt with in a certain way.

Possession left behind
Once the family have visited the property and collected everything they wish, there maybe a number of items left that belonged to the tenant that the family do not want to take.
You cannot just throw these out.
You, as the landlord are still bound by Tort law to safeguard those possession and only dispose of them when you have permission or a set time frame has passed.
The law in this case is Torts (interference with goods) Act 1977, which explains that you must serve a Torts Notice on the tenants estate explaining that you will give them a set period of time to remove the good or you will then dispose of them.
If you get a letter directly from the Estate stating that the remaining possessions can be disposed of, then there is no need for the Torts Notice.

Scenario 2- No next of kin or Will
This scenario is not as unusual as you may think, as a society we are more disconnected than ever with many people living alone without immediate family.

So if a tenant passes away and have no NOK, this is known as Intestate, in this situation the local court of where the person died will appoint an administrator.
It is important to note, that it will be the court closest to where a person died rather than a court closest to where a person lived, this is important to note if a tenant dies outside of the home, may be on holiday or in a hospital miles away from the property.

If you do not know who the court administrator is, you can contact your local court and ask for the Pubic Trustee, who will be able to locate the administrator for your tenant and for which court you need to liaise.

All of the other points I raised in scenario 1 still apply, the tenancy will need to be ended and the administrator advised of rent due.
The court administrator cannot end the tenancy with a Notice to quit and if the tenancy has migrated to a periodic then your only resolution is to serve a S21 on the court administrator as the tenants representative and a copy to the property.

There is a slight difference with regards to possessions left in the property, as there is not NOK, you as the landlord automatically become an Involuntary Bailee and you have no legal right to dispose of any of the tenants possessions.
In this instance you must serve the Torts Notice on the court administrator and follow the Torts process to the end in reappear of removing any of the deceased tenants items.

No DSS to YES YES YES

For as long as I can remember landlords have always been adverse to accepting tenants whose income is state benefits
Deemed, unreliable and more likely than not to leave a landlord with thousands of pounds in rent arrears, landlords have always preferred an employed tenant claiming them to be reliable and with a guaranteed income each month.

What a difference a virus makes.
The small number of landlords who have been accepting tenants on benefits and those who made it a clear business model are now sitting pretty in these bizarre times

All of the reliable employed tenants with the regular income are now stamping their feet and demanding they live rent free, causing landlords sleepless nights and uncomfortable calls to their Mortgage lenders.

While landlords whose tenants claim benefits have not seen a flicker of this problem, in fact these landlords are also experiencing rent increases as the benefit freeze was lifted today and those savvy landlords who knew this was happening would have submitted S13s a month ago in readiness for the the increase in local housing allowance, although this increase is small in comparison to the usual increase, it is in this time of uncertainty, welcomed and guaranteed.

Now with thousands of tenants losing their jobs and having to claim benefits, will this finally change the mindset of landlords who were so set against any form of benefit as an income.
Now this is the only option, will Landlords be more open to accept the reliable income of the benefit system.

Local Housing Allowance ( LHA) is the level of benefit a person can get towards their rent, this is different for each area and is calculated on the 30 percentile of the rents for that type of property in that area.
With the benefit freeze, which lasted 4 years, this meant that market rents in some areas shot up well above LHA meaning tenants on benefits couldn’t afford to rent in some towns and cities or were left with a shortfall that they would need to ‘top up’, for landlords this would not fit the business model and they would want to get the highest rent possible, which from a business perspective is totally understandable.

However with the freeze removed many LHA rates would easily cover rent in most areas, with no need for a topup.

We don’t know how long it will take our tenants to find new jobs, pay off their arrears and be in a position to start paying full rent again, but those landlords who worked outside the box and saw the logic and stability of a tenant on benefits will not be experiencing as many problems as those who refused.

Will this see a change of mind for landlords and agents when considering tenants in the future, will the small print say ‘ Sorry No employed’