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General matters

Let me take this opportunity, Mr. Deputy Speaker, to wish you and all Members of the House, as well as its staff and their families, a very merry Christmas and a happy new year. In April 2008, the last Government introduced the local housing allowance as a new way of calculating housing benefit for tenants in the private sector. The allowance is paid directly to the tenant, who should pass it on to the landlord as rent. The housing allowance and direct payments to tenants allow prospective tenants to ““shop around”” with their allowances, but following the introduction of local housing allowances more than 41% of private landlords—an increase of 4%—are not letting to tenants who receive such allowances, mainly because of the lack of a guarantee that rents will be received. The greatest difficulty facing many landlords with local housing allowance tenants is their inability to obtain rents. Currently, when tenants are in arrears, landlords must wait for a minimum of eight weeks before they can request direct payments. I recently attended a meeting of the Calderdale landlords association in Calder Valley. The picture that was painted was of a sector in meltdown. No fewer than 350 properties belonging to the members of the association who were present at the meeting are in danger of being withdrawn from those receiving local housing allowances, entirely owing to the lack of guarantees. In far too many cases throughout England, tenants move in, pay the first month's rent, and then do not pay for two months. Leaving arrears, they then move across the border to neighbouring local authority areas and repeat the process. Then, of course, they move on again. Many pay only three months' rent in 12 months. The cost to landlords is getting out of hand, and the practice is keeping rental charges far too high. Honest, decent people who pay their rent on time are subsidising many people who do not. A landlord who contacted me recently said that in a portfolio of 15 houses, seven tenants were more than two months in arrears, and five of them had moved on owing well over £1,000 each in rent. The cost to landlords of pursuing back rents is also expensive, and landlords incurring that additional expense often have no chance of receiving any money at all. As a result, many landlords do not pursue back rents, as by doing so they would only add to their losses. At a time when supply should be increasing to meet increasing demand and take advantage of higher rents, stock levels in the sector fell by 2.7% between the first and second quarters of the year. As a consequence, not only is supply much tighter, but rents have increased at a rate of 2.3% over the same period because supply is so much lower than demand. Other issues in the sector are also causing a decline in stock levels. The taxation system provides little incentive for investment in accommodation; we should allow the private rented sector to be treated in the same way as businesses. The system is also failing to identify vulnerable people who, even under the current arrangement, should be eligible for direct payment of their local housing allowance to their landlords. Many tenants are failing to manage their finances properly, falling into rent arrears and having their tenancies terminated. The safeguarding processes that exist are failing. Many landlords are reporting that rents have not been paid this month, as some tenants are choosing to spend their housing allowance on Christmas rather than paying their rents. The solution to the crisis that is starting to develop is quite simple. The Residential Landlords Association, Shelter and Crisis all agree on two specific points. First, their tenants—who consist overwhelmingly of claimants of local housing allowance—say that they would prefer the allowance to be paid directly to their landlords. That would help people to manage their finances, and would reduce the temptation to use the allowance to pay other debts rather than paying rent. It would also provide tenants with security so they could be sure that the rent had been paid and there was no chance of losing their home.