Tenants on direct payment pilots pay rent on time

A positive early snapshot is emerging from the six 12-month pilot projects set up by the government in June to test the direct payment of benefits to claimants.

Under government plans, a host of benefits, including housing benefit, will be combined into one monthly universal credit paid directly to tenants from October 2013.

Landlords have voiced concerns about the plans, which they fear could lead to increased rent arrears, threatening their income and affecting borrowing rates.

Family Mosaic housing association, which is running a pilot project with Southwark Council in London, was surprised to find 95 per cent of the 600 Family Mosaic tenants on the pilot already had bank accounts.

The first direct payment of benefits to claimants last month saw 80 per cent of rent payments to the landlord go through on time. This was a better than anticipated result, according to Brendan Sarsfield, chief executive of Family Mosaic. Half of tenants on the pilot have either set up a direct debit to pay rent or will do so once they are convinced the council will pay benefit regularly on time.

Mr Sarsfield said: ‘Tenants are normal people and want to pay their rent. Some of the statements that have been made to date have made tenants sound like thieves and scroungers.’

Wakefield and District Housing has taken rent payments from the first batch of around 340 of 1,700 tenants it plans to eventually include in the pilot. The 340 are, however, tenants WDH considers need the least support.
Kevin Dodd, chief executive of WDH, said: ‘The majority of payments were made but we are currently analysing the reasons for the small number of non-payments.’

Mr Dodd said in some cases banks had applied overdraft charges meaning payments could not go through as there was no longer enough money in tenants’ accounts.

A spokesperson for the DWP said: ‘Initial findings from the demonstration projects are positive but full details and lessons learned will be shared later this year.’

Other landlords, including Bron Afon Community Housing in Wales, The Wrekin Housing Trust and Shropshire Council declined to comment. The DWP has discouraged landlords from talking publicly about the pilots. The DWP spokesperson said this was because it is working with landlords ‘to ensure the findings are presented correctly and in the right context’.