Welfare Reform is one of the Coalition Government's flagship programmes in the current Parliament. It is being introduced this autumn initially for new claimants, with a stated aim of being phased in over the next four years and with full implementation expected by 2017.
Government's aim is quite simple, and that is to reduce the cost to the taxpayer of the current myriad of benefits currently being paid out and to 'encourage' benefit claimants to get back into paid employment rather than depending on the state.
Over the last year or so we have regularly reported (see page 46), on this very important topic as the potential implications for many residential landlords are significant.
Those readers who let property to tenants in receipt of housing benefit will already be aware of Government's aims as average rents linked from Local Housing Allowance (LHA) have been considerably tightened up in the last year or so in most UK regions. A maximum of £400 per week has been imposed on the LHA rate to any claimant irrespective of their family composition, whilst some 85,000 single people aged 35 or under can now only qualify for a shared room rate rather than a one-bed flat.
The biggest threat of course to those who specialise in letting property to tenants 'on benefits' is the removal of the tenant's option to have their rent paid directly to the landlord or the appointed letting agent. The government Ministers primarily responsible (Lord Freud and Iain Duncan Smith) strongly believe that 'financial responsibility' should be encouraged towards benefit claimants and that the implementation of one single benefit (Universal Credit) will result in claimants being more responsible with their personal finances.