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In November 2018, 1.1 million people on Housing Benefit (HB) and 340,000 households on Universal Credit (UC) utilised these benefits to at least partly pay for their rent in the private sector. Most of these individuals are eligible for social housing, but with 1.1 million of people being stuck on waiting lists due to shortages, many have to wait for years before receiving it. In the meantime, they have to live somewhere, so they are in the private rented sector.

This group of people faces significant challenges in obtaining alternative housing to that in the social rented sector, and it has only been getting more difficult for them in recent years. In 2010, 53% of private landlords were unhappy to rent to those in receipt of benefits. By 2017, this number increased to 61%. One of the culprits is UC.

Under HB, local authorities had a significant level of discretion for enabling the payment of this benefit to landlords directly. Hence, private landlords could experience a significant level of financial security. This was a fairly common practice, representing 29% of all privately rented HB claims.

Whilst UC claimants also have the option to request direct payments to landlords under the Alternative Payment Arrangements (APAs) scheme, the uptake has been extremely limited, with only 5% of privately rented UC claims coming to such an arrangement by November 2018. This seems to be caused by several factors.

First, the criteria for UC APAs is significantly more restrictive when compared to HB. Under HB, local authorities had the discretion to pay directly to the landlord if they believed that it would help the claimant to obtain or keep a tenancy. This is no longer a valid factor under UC. Instead, the criteria emphasises problems such as debt, substance abuse or mental health.

Second, many UC claimants are not even aware that APAs exist. For example, only 30% of UC claimants in a recent Citizens Advice survey were told about direct payments to landlords, while a majority of those who were not told would have liked to utilise them. Claimant interviews from our report on UC, Helping Hand? also suggest that awareness is low and that even when claimants are aware, Jobcentre staff do not always choose to facilitate such arrangements.

To give credit where it is due, the Government has started to act on the issue in 2019, announcing that it will build an online platform for private landlords to allow them to be paid directly. The House of Commons Work and Pensions Select Committee’s current inquiry into ‘No DSS’ clauses (which means landlords not renting to someone on benefits) has also prompted most banks and building societies to remove their benefit restrictions from buy-to-let mortgage contracts, which should change the behaviour of landlords for the better too.

Government could do more to help UC claimants who are privately renting. In the short-term, giving claimants direct control of the destination of their housing payment through an online system, as suggested in Bright Blue’s recent report Helping Hand?, should greatly increase the uptake of direct payments to landlords and address some of their financial concerns. In the long-term, the Government needs to address shortages in social housing so that vulnerable individuals are not forced to struggle in the private rented sector.

Anvar Sarygulov is a Researcher at Bright Blue.