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Crises et politiques du logement

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David Fée
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Corinne Nativel

Troisième partie. Nouvelles orientations politiques : de l'État-providence à la loi du marché

Housing Benefit and the Private Rented Sector in the UK

Julie Rugg

Texte intégral

  • 1 Communities and Local Government, page consulted 7th June 2007, Survey of English Housing, http:// (...)

1This chapter will consider the experience of people living in the often-overlooked third tenure in British housing: the private rented sector or PRS. The latest available Survey of English Housing statistics indicate that in England in 2006, there were 2.5m private renters – around 12 per cent of the total population. This was not a uniform figure: in the North East region, the figure is 9 per cent, and in London – where affordable housing supply is highly problematic – around 19 per cent of households rent privately.1

  • 2 Statistic derived from Survey of English Housing data, and data on HB caseloads from Wilcox, S., p (...)

2Despite the fact that private renting is by far the minority tenure, it serves a very broad range of essential purposes. As a consequence, it is possible to define a number of niche markets within the sector. For example, a large number of students in higher education rent from private landlords during their period of study, and in some cities high student numbers have led to the establishment of a vibrant – and some people may say too-dominant – rental sector in neighbourhoods around the college or university (Rugg, Rhodes and Jones, 2000). However, for the purposes of this chapter, the focus will be on people in what might be termed the benefit market within the private rented sector. These people are reliant on the state to pay some or all of their rental costs. This is not an insignificant part of the market. In England in 2001, 31.8 per cent of renters did so with support from the state.2 In some areas, this number can be much higher: for example, in Blackpool, around 73 per cent of renters may rely on state assistance with the rent; in Edinburgh, just 23 per cent of the PRS is taken up with benefit tenants; and in Lewisham – a London borough – the proportion is 40 per cent (Wilcox, 2007: forthcoming).

3Generally speaking, renters in the PRS who are reliant on benefit comprise a highly marginalised and vulnerable group. However, housing benefit – the benefit that helps low-income households to pay the rent – marginalises this group further because of the way in which the benefit is framed and operated. Recently-introduced changes to housing benefit are likely to exacerbate these difficulties.

Renters in the benefit market

4First, the chapter will begin by discussing the characteristics of renters who are reliant on Housing Benefit. We are in a good position to discuss this group, since recent changes to Housing Benefit have been accompanied by a large-scale evaluation of their possible impacts. So, at present, we know more about renting in the benefit market than ever before.

5Research on the particular characteristics of private renters in receipt of housing benefit indicates that certain key differences emerge in comparison with the wider PRS population.

6First, with regard to age, the PRS taken in its entirety is often represented as ‘the youthful tenure’. According to the 2001 Census, taking all tenures together, households with household heads aged under 25 comprised four per cent of the total. Within the PRS, this proportion was fifteen per cent (Rhodes, 2006: 44). However, for the benefit market, the proportion was lower: nine per cent of claimant household heads were under the age of 25 (Anderson et al., 2005: 17). The relatively low presence of young people in the benefit market most probably reflects the operation of the Single Room Rent (SRR). This regulation restricts the level of support offered to younger, single childless claimants. The housing benefit payment for these individuals is based on an eligible rent for a room in a property with shared facilities. This restriction represents the continuation of a policy trend that has restricted the help with housing costs given to young people, in the belief that such assistance comprises an encouragement to leave the parental home (Rugg, 1999: 50). Since the introduction of the SRR, the number of recipients has declined substantially. Harvey and Houston’s 2005 evaluation of the regulations estimated that the SRR caseload had fallen from around 101,000 live cases in 1997/8 to 34,000 in 2003 (Harvey and Houston, 2005: 1). This report concluded that since the introduction of the SRR, landlords’ unwillingness to deal with young people had meant that the PRS was ‘increasingly unavailable’ to under-25s who looked to the state to help them pay the rent. Thus the benefit market is not necessarily a ‘youthful’ sector.

7A further difference between tenants in the benefit market compared with tenants overall in the PRS relates to household structure. According to the 2001 Census, single people made up the highest proportion of household types across all tenures. For the wider PRS, the second most common household type was couples with no dependant children. This proportion (16 per cent) was close to the all-tenure proportion for this household type, of 18 per cent. However, within the benefit market, couples with no dependent children comprised just four per cent of household types. Within this market, by far the most common group – after single people – was lone parents. Across all tenures, 6 per cent of households were lone parents. Within the PRS this figure increased to 11 per cent. In the benefit market, 27 per cent of households were lone parents (Anderson et al., 2005: 20). Indeed, this proportion was higher than the proportion of lone parents in social housing. A similar finding was evident in Gray’s study of housing benefit recipients in Amagh, Northern Ireland: in this case, 43 per cent of respondents were lone parents (Gray and McAnulty, 2006). One explanation is offered by Kemp and Keoghan. In their study of movement in and out of the PRS, they found a high number of moves into the PRS from social housing, often following relationship breakdown (Kemp and Keoghan, 2001: 24).

8A third substantial difference in the benefit market compared to the wider PRS is the high proportion of household heads who are long-term sick and disabled. Across all tenures, four per cent of households were described in this manner in 2001, and this figure roughly equates to the PRS overall, where the proportion is six per cent. However, within the benefit market, 26 per cent of claimants were long-term sick or disabled. Kemp and Keoghan comment that both lone parents and long-term sick were ‘the very kinds of tenants that New Labour has said should be in social housing rather than private renting’ (Kemp and Keoghan, 2001: 22). Gray and McAnulty have also recognised the enhanced role played by private renting in accommodating households who have difficulty in accessing an increasingly restricted stock of social housing. Thus, with regard to some key characteristics, claimants in the benefit market within the PRS are substantially different from the wider PRS tenantry, and present an image slightly at odds with the ‘young and dynamic’ image of the sector evident in some accounts. It could be claimed that tenants in the PRS benefit market are in greatest need of assistance that is framed to reflect their vulnerability.

Housing benefit

9Tenants in the private rented sector receive help with paying the rent through housing benefit. This benefit is administered by each local authority, operating on behalf of the relevant central government agency – the Department for Work and Pensions. The framework for the housing benefit system is established in statute, but its administration is subject to a high level of discretion at local level. It is a highly complex benefit to administer. Guidance circulars from the Department of Work and Pensions aim to offer clarification and good practice guidance on housing benefit administration and at least one circular is issued every week.

10An understanding of the administration of housing benefit is central to appreciating the marginalised nature of benefit recipients in the PRS, so a discussion of the regulations is necessary. However, the discussion will focus just on two or three salient points of difficulty.

11First, housing benefit is a means-tested benefit, and extensive details on a households’ income are required in order for the local authority to assess what level of assistance is needed. In order to combat fraud, local authorities have been encouraged to introduce what has been termed ‘the verification framework’ (Pettigrew et al., 2001). This guidance requires people who are applying for benefit to produce – in support of their claim – actual documents (rather than copies of documents) to prove both identity and income. A failure to produce all the necessary documents can delay the processing of the benefit substantially since local authorities then have to recontact the applicant. Benefit claim forms routinely exceed twenty pages in length. Local authorities, perhaps unsurprisingly, cite incorrect and incomplete applications as a major difficulty with administration. The regulations state that local authorities must process applications within 14 days of receipt of all the necessary information. This target is not always met. For example, Edinburgh faced substantial criticism in 2004 when it was revealed that only 41 per cent of new claims were being dealt with within the deadline, and it was taking – on average – 83 days to process new claims. In that year, the national average was around 55 days (Edinburgh Evening News, 2004; Walker, 2006: 42). It should also be noted that, even in the case of minor changes in circumstance, households would have to reapply for housing benefit.

12A second and highly problematic feature of housing benefit administration is the role played by The Rent Service in determining the ‘eligible rent’ for a given property. In 1989, in order to contain the overall budget for housing benefit assistance, rent officers were given the task of checking each new and re-assessed claim. The Rent Service was to check that the rent being charged by the landlord was a reasonable market rent, and that the property being rented was suitable for the size of the household. These regulations reflected concern that households in receipt of housing benefit were using the benefit to rent much higher quality properties than would be the case if they were paying the rent themselves, from income gained from employment (McLaverty and Kemp, 1993).

13In actuality, the introduction of this additional step in the processing of the claim brought substantial uncertainty both to tenants and to landlords. The Rent Service – operating locally – made decisions on each application, assessing the rent being charged for a given property against a range of market rents for that property type and in a similar location that they had collected from a number of different sources. If the rent was deemed to be too high, then the rent service would indicate what would be a suitable rent for a property of that size and in that location, and the housing benefit administrators would use that rent figure to calculate the benefit entitlement. No-one – not the landlords, the tenants, housing benefit administration or welfare agencies – could make a certain judgement on what rent would come back from The Rent Service. This information was vitally important, since there is often a shortfall between the rent being charged by the landlord, and the rent being paid by housing benefit. Sixty per cent of the housing benefit recipients who were interviewed as part of the local housing evaluation in 2004 were subject to some sort of restriction, with an average of £16 a week (around €24) shortfall. The option then is for tenants to try and negotiate a rent reduction from their landlord, or to make up the shortfall from their other benefit income.

14One consequence of the housing benefit regulations is the marked unwillingness of landlords to let to people in receipt of housing benefit. For many landlords, housing benefit recipients were in any case innately undesirable, because of their need to apply for housing benefit. Some of the landlords who were interviewed as part of the evaluation recently considered that these households were somehow flawed, and that something had gone wrong if they had to apply for benefit, and the landlord did not want to have to deal with any sort of difficulty.

15However, for many of the more tolerant landlords, the difficulty with letting to housing benefit recipients was that it meant having to deal with housing benefit administration. The way housing benefit is processed and paid means that landlords often had to reframe their normal management practices in order to accommodate the regulations. Thus, for example, the benefit was paid wholly in arrears and – as has been seen – a long delay in processing means that tenancies may run for perhaps two or three months before a tenant is able to make their first regular rental payment. This situation presents considerable risk to the landlord if the tenant decides to abscond with the first housing benefit cheque, which by that time may amount to hundreds of pounds.

The housing benefit market

16So, to reflect back on the high proportion of tenants in receipt of HB in the PRS, why are landlords still letting to people on housing benefit if it presents so many difficulties? In answering this question, it is necessary to define what might be termed the benefit market within the PRS. This task is not straightforward, and two factors underlie its complexity. First, it has to be stressed that the simple fact of letting to someone in receipt of housing benefit does not make a landlord or agent a ‘benefit landlord’. In many cases, a landlord or letting agent operating largely in the wider private rented sector might find themselves letting to a benefit claimant inadvertently. An individual or household may secure a tenancy whilst they are working, and then – through a change in household or employment circumstances – might find it necessary to apply for housing benefit to help them pay the rent. Few landlords or agents would ask tenants to leave in those circumstances, although any chronic difficulties in meeting rental payments may lead to the termination of the tenancy sooner than would have been the case if the tenant had continued in work. For the most part, the landlord would continue to treat the tenant as if they were still in work, and expect that they would take responsibility for making a housing benefit claim. Generally, the circumstance would be viewed as a temporary anomaly in the tenancy: the tenant would expect to re-gain employment or otherwise manage their affairs so that receipt of housing benefit would cease to be necessary. Although this train of events is probably not uncommon, no figures are available on the incidence of short-term ‘temporary’ periods on housing benefit, compared with chronic, long-term reliance on help with rental payment.

17A second problem with benefit market definition is that landlords and agents rarely express a positive preference for letting to people in receipt of housing benefit. Amongst the landlords and letting agents in the evaluation – which was focussed on the bottom end of the PRS – just four per cent of respondents overall indicated that they actively preferred letting to unemployed people. Even at the bottom end of the rental market, the preference is for a working tenant, largely because of the associated difficulties attached to housing benefit administration.

18However, despite the fact that benefit landlords rarely declare themselves as such, the qualitative interviews with landlords and agents contained a distinguishable group whose portfolios tended to be dominated by lettings to households in receipt of housing benefit (Rugg, 2006). The act of classifying a landlord as a ‘benefit landlord’ does not generally rest on easily quantifiable factors such as whether the landlord operated as a company, or the characteristics of their portfolios. Furthermore, as has been seen, ‘benefit landlordism’ was rarely an active choice amongst the respondents who were interviewed. Rather, it can be described as an agglomeration of experience, knowledge, attitude and management practice. In order to illustrate this point, it is perhaps appropriate to give a composite picture of the ‘career’ of a typical benefit landlord. The landlord may have begun letting as a sideline practice initially, started through the purchase of low-value property in locality dominated by low-income households. The location of the properties was such that it would be difficult to find demand groups other than unemployed households, although there may be some low-income working tenants. Many of the properties initially might be houses in multiple occupation – shared properties. The landlord initially set the rent by looking around to see what is charged for other, similar properties. Tenants were usually secured through word of mouth recommendation, with the ‘pool’ of tenants tending to be very local. The initial encounter with the benefit system was a shock, and there could be some confusion on the part of the landlord with regard to the administrative requirements of the system. As experience of the system progresses, the landlord generally accommodates any quirks of the local housing benefit administration, for example, in becoming aware of where an application may be vulnerable to delay. The landlord may also become aware of the amounts generally set by The Rent Service for particular property types and simply set the rent at that amount, on the understanding that tenants are infrequently able to meet shortfall payments from their other benefit income. For the most part, the management style tends to be flexible. There would be a willingness to take household groups where long-term receipt of housing benefit is likely. An effort would usually be made to keep ‘good’ tenants who are clearly looking for permanent accommodation, and who look after the property they are renting. For these tenants, the landlord may not increase the rent, or only give limited increases, for extended periods. At the same time, there may be an acknowledgement that – particularly in the houses in multiple occupation – some tenants may be so chaotic that they are unable to keep a tenancy for any length of time.

19Benefit landlordism also generally required a good understanding of housing benefit regulations. Often, landlords dealing routinely with the housing benefit market adjusted their practices as new regulations are introduced. For example, the implementation of the Verification Framework requirements might mean that a landlord would be more proactive in sorting out a tenant’s initial application for housing benefit, to the degree of taking the tenant and the required supporting documentation to the principal housing benefit administration office, to get a receipt from that office confirming that a full application had been received.

20For the majority of landlords in the benefit market, the principal advantage in dealing with the market was not the level of rent that could be charged – which was often regarded as being at below-market levels – but the fact that, once it had been set up, housing benefit payments were made with regularity. This was especially the case if the payments were made direct from the local authority to the landlord. Under the housing benefit regulations, the housing benefit can either be received by the tenant or be paid directly to the landlord. The landlord with more than one property would receive a single cheque with a payment schedule indicating the rents that were payable on given properties, so the payments could be checked against the landlord’s rent records. Indeed, landlords with long-term benefit-recipient tenants on direct payments could almost bank on this income and frequently used the steady rental receipts to expand their portfolios. Many landlords specified that they would only take housing benefit recipients if they indicated on their HB application that the money would go direct to landlord. Many claimants were happy with this situation, since it meant that they could secure a tenancy, and they could be assured that the rent would always be paid on time.

The new regulations

  • 3 For background details on the rationale for the new regulations, see: Department for Work and Pens (...)

21However, ongoing difficulties with the housing benefit regulations have led to the introduction of new regulations – taken in totality, generally termed the Local Housing Allowance.3 The LHA focuses on two aspects of housing benefit deemed to be particularly problematic.

22First, to counter difficulties with regard to transparency in rent levels, the local housing allowance removes all individual assessment of rents, and instead introduced a framework of allowances set on household size. So, a family that comprises a couple with one child would be eligible for a three-room rate, that is, two bedrooms and one living room; a family comprising a couple with a girl aged six and a boy aged five would be eligible for the five room rate – three bedrooms and two living rooms. The allowances would be set by the local rent service using its market database and monitored regularly with possible monthly updates. By reviewing a family’s structure, it would be possible to work out in advance what the household would be paid. The allowance would be paid irrespective of the rent being charged by the landlord. So if the rent was lower, then the household kept the difference, and if the rent was higher then – as before – the household made up the shortfall. As a consequence, everyone was aware what rent would be paid, and households could ‘shop’ for property accordingly.

23Second, and more controversially, the regulations required that, unless certain conditions could be fulfilled, all housing benefit would be paid directly to the tenant who would then make arrangements to pay the landlord. This regulation was introduced as a means of giving tenants a greater sense of responsibility for the rent being charged, and changing their relationship with the landlord. Under the old system, the sense prevailed that the landlord had their relationship with the local authority which paid the rent directly. Under the new regulations, the tenant would be more likely to be viewed as and see themselves as a consumer, and the landlord might feel a greater pressure with regard to improving property standards.

24It is this new aspect of the LHA that has garnered the greatest level of interest, since it comprises the most substantial alteration to the workings of the benefit market. For many landlords, the change away from direct payments means that tenants will fall into rent arrears. A survey of landlords in the evaluation areas indicates that there was a reduced willingness to let to benefit tenants under the new regulations largely as a consequence of the ending of direct payments, the actual experience of rent arrears and the fear of rent arrears (Rhodes and Rugg, 2006: 58). Although there was no substantial evidence of landlords reducing their lets to housing benefit claimants – reductions had gone down by single-figure percentage points – the reductions were most marked in the locations where housing benefit recipients had dominated the market, but where the influx of migrant workers from Eastern Europe comprised a new alternative demand group for rental property.

25People in receipt of housing benefit in the private rented sector comprise a highly vulnerable group. Their economic circumstances often place them at a greater level of deprivation than social housing tenants. However, the benefit structure that has been established to support their living in the private rented sector generally operates to further their exclusion. Quite simply, the way in which housing benefit is administered means that landlords in the PRS do not want to let to people in receipt of benefit.

26Overall, it could be argued that there were just two reasons why a landlord might actively choose to let to someone on housing benefit: the rent was paid regularly and directly, and in many poor areas there was no alternative demand group for rental property. Unfortunately, changes in regulations have come at the same time as substantial change in the PRS market overall in the UK. The influx of migrant workers from many eastern European countries has introduced the possibility of an alternative rental demand group. For some traditional benefit landlords, the shift to meeting this new demand looks to be a very welcome prospect. For households whose only option is residence in private renting, the rolling out of the new LHA regulations carries the possibility of further reducing their options for renting to the very bottom end of the PRS where no alternative demand groups would choose to rent.

Bibliographie

References

Anderson, T., Stafford, B. and Woodland, S., 2005, Claiming Housing Benefit in the Private Rented Sector, London, Department for Work and Pensions, Edinburgh Evening News, 1st July 2004.

Gray, P. and McAnulty, U., 2006, “The increased role of the private rented sector in catering for social housing in Northern Ireland”, unpublished paper given to the HSA conference, York.

Harvey, J. and Houston, D., 2005, Research into the Single Room Rent regulations, London, Department for Work and Pensions.

Kemp, P. A. and Keoghan, M., 2001, “Movement in and out of the private rented sector in England”, in Housing Studies, vol. 16, no. 1, p. 21–37.

McLaverty, P. and Kemp, P. A., 1994, “The determination of eligible rents for housing benefit: the implementation by local authorities of central government policy”, in Government and Policy, vol. 12, no. 1, p. 109–22.

Pettigrew, N., Thomas, A., Candy, S., Joyce, L. and Saunders, T., 2001, The Verification Framework: Early Experiences of Implementation, London, Department of Social Security.

Rhodes, D., 2006, The Modern Private Rented Sector, York, Joseph Rowntree Foundation.

Rhodes, D. and Rugg, J., 2006, Local Housing Allowance Final Evaluation: The Survey Evidence of Landlords and Agents Experience in the Nine Pathfinder Areas, London, Department for Work and Pensions.

Rugg, J., 1999, ‘‘The use and ‘abuse’ of private renting and help with rental costs’’, in Rugg, J. (ed.) Young People, Housing and Social Policy, London, Routledge, p. 50–64.

Rugg, J., Rhodes, D., and Jones, A., 2000, The Nature and Impact of Student Demand on Housing Markets, York, York Publishing Services.

Rugg, J., 2006, Local Housing Allowance Final Evaluation: The Qualitative Evidence Of Landlords’ and Agents’ Experience in the Nine Pathfinder Areas, London, Department for Work and Pensions.

Walker, B., 2006, Local Housing Allowance Final Evaluation: Implementation and Delivery in the Nine Pathfinder Areas, London, Department for Work and Pensions.

Wilcox, S., 2007, forthcoming, Local Housing Allowance Final Evaluation: The Market Evidence, London, Department for Work and Pensions.

Notes

1 Communities and Local Government, page consulted 7th June 2007, Survey of English Housing, http://www.communities.gov.uk/index.asp?id=1154805.

2 Statistic derived from Survey of English Housing data, and data on HB caseloads from Wilcox, S., page consulted 7th June 2007, Housing Finance Review, http://www.york.ac.uk/inst/chp/hfronline.htm.

3 For background details on the rationale for the new regulations, see: Department for Work and Pensions, page consulted 7th June 2007, http://www.dwp.gov.uk/housingbenefit/lha/bgtolha.asp.

Auteur

Centre for Housing Policy, University of York, UK

© Presses Sorbonne Nouvelle, 2008

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