pap Posted 3 December, 2012 Share Posted 3 December, 2012 Next year will see the introduction of universal credit. Broadly, the proposals are about streamlining the benefits system. Instead of getting benefit through different channels, something that most people will agree is expensive and costs a lot of money, claimants will get a single payment covering all of his or her entitlements. Sounds super, right? Well, there's a big problem; chiefly the way that housing benefit is paid. For many years, these payments have circumvented the claimant entirely, especially with big social landlords. Tenants in privately rented accommodation currently have the option to send money direct to the landlord (unless the landlord is not deemed fit and proper). That all goes away with universal credit. Local social landlords are already planning for a default rate of 9%. Ultimately, this 9% of tenants who don't pay their bills will push prices up for everyone else. Not just that either. Another huge area for registered social landlords is cash flow. Under the existing system, they are able to count on a huge block of money being paid at the same time each month. There are bound to be people in the private sector for which the temptation will prove too much; they won't pay their rent on time - everyone suffers as a result, including any dependants they might have. Evictions ultimately aren't good for anyone. Evictees invariably end up in dodgy temporary housing (we've already seen this as part of the HB cap) which causes all its own problems, Is the housing benefit component of universal credit 2013's ticking policy time bomb? Link to comment Share on other sites More sharing options...
Shrek Posted 3 December, 2012 Share Posted 3 December, 2012 The government is expecting people with no budgeting skills to budget. To receive one lump sum a month and pay the right people the correct amounts. On time. This should be fun One upside is that BTLers letting to tenants on benefits may end up with less as a result. They may then be forced to sell up. Lots of this happening = lots of property on the market = lower house prices (which would be a good thing) = lower mortgages for new buyers = less demand for rental properties = lower rents. Local authorities would be forced to build again (the way it should be anyway). That said, the new changes are staggered and existing claimants won't be moved across to the new system for a while anyway. Link to comment Share on other sites More sharing options...
Doctoroncall Posted 3 December, 2012 Share Posted 3 December, 2012 Depends on the requirements, how convoluted the HB process is and whether there are checks in place to warn if late payments are imminent. But knowing this is government policy (regardless of party), it will be incomplete and badly implemented and the sorry saps that are on the front line will have to do their own thing to make it work. Link to comment Share on other sites More sharing options...
Frank's cousin Posted 3 December, 2012 Share Posted 3 December, 2012 Not quite sure why thsie needs to be the case... the calculation and total entitlement can be centralised under the 'universal' credit approach - nothing to stop a % of that that needs to passed on to landlords not being transfereed directly as far as I can see... or am I missing something (government incompetance perhaps?) Link to comment Share on other sites More sharing options...
CB Saint Posted 3 December, 2012 Share Posted 3 December, 2012 The government is expecting people with no budgeting skills to budget. To receive one lump sum a month and pay the right people the correct amounts. On time. This should be fun One upside is that BTLers letting to tenants on benefits may end up with less as a result. They may then be forced to sell up. Lots of this happening = lots of property on the market = lower house prices (which would be a good thing) = lower mortgages for new buyers = less demand for rental properties = lower rents. Local authorities would be forced to build again (the way it should be anyway). That said, the new changes are staggered and existing claimants won't be moved across to the new system for a while anyway. I have an inkling that people on low incomes are much more adept at budgeting than you give them credit for. Link to comment Share on other sites More sharing options...
badgerx16 Posted 3 December, 2012 Share Posted 3 December, 2012 The government is expecting people with no budgeting skills to budget. Well, they seem happy to have done this with the Chancellor. Link to comment Share on other sites More sharing options...
Shrek Posted 3 December, 2012 Share Posted 3 December, 2012 I have an inkling that people on low incomes are much more adept at budgeting than you give them credit for. Oh I'm sure some will be fine, but from what I've seen within a local authority Housing service, many won't. Ask tenants who are on 100% housing benefit whether they pay rent for their accommodation, and an alarming number will say that they don't. The same goes for council tax which they will be expected to pay for the first time next year. Then there's under occupation charges which will force tenants to pay for the rooms they are not using (read, they haven't got enough family members to fill). As far as budgeting goes, the reality is that a lot of people pay what they feel is the priority at the time. And a big bugger at the door demanding the 8000% interest on last week's payday loan is usually a priority Link to comment Share on other sites More sharing options...
trousers Posted 3 December, 2012 Share Posted 3 December, 2012 I have an inkling that people on low incomes are much more adept at budgeting than you give them credit for. ^ This People can be very good (or poor) at budgeting when it suits them... Link to comment Share on other sites More sharing options...
pap Posted 3 December, 2012 Author Share Posted 3 December, 2012 Some interesting views. I have to admit, being a little down on the policy, I didn't see any potential positives, such as property prices potentially going down as a result of BTL lenders leaving the market. Going to be carnage in the short-term and will definitely cost more money than it is designed to save. Link to comment Share on other sites More sharing options...
Wes Tender Posted 4 December, 2012 Share Posted 4 December, 2012 I have an inkling that people on low incomes are much more adept at budgeting than you give them credit for. You've got more faith in human nature than me. I suspect that whereas there are many on low incomes who do budget carefully, there are also many who will spend beyond their means given half a chance. Like those pursuaded to lower their monthly debt payments by consolidating them into one larger debt and then when they find that the monthly payment has reduced substantially, (because the loan term has been massively increased), they go out and buy a car or book a holiday on the never never. Link to comment Share on other sites More sharing options...
OldNick Posted 4 December, 2012 Share Posted 4 December, 2012 I suggest that the money will go into the accounts and could be snatched by credit card companies etc who are owed money. It seems a bad mistake and whoever brought this idea to the forefront needs sacking, whoever it may be. How can you expect people to not spend some of this money if they are desperate...or dishonest. Link to comment Share on other sites More sharing options...
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