Universal Credit Scottish choices: evaluation - qualitative research - annex b

5. Perceptions of the impacts of Scottish choices for landlords

Key findings

• Landlord awareness and understanding of Scottish choices was higher among social landlords compared with private landlords.
• Social landlords were divided in their opinion of the impact of the Direct Payments to Landlord option on arrears. Those who were positive indicated that it had helped mitigate the increase in arrears some reported since Universal Credit was introduced. Those who were more negative largely traced problems back to the system the DWP used to make payments to landlords.
• The new updated payment system was described as a 'game changer'. However, it was also suggested that it would not address every problem around the administration of Scottish choices.
• In particular, social landlords were critical of the 'data flow' from the DWP to landlords around Scottish choices, arguing that it made it difficult both to keep on top of rental income, and to intervene quickly when tenants might be at risk of arrears.
• The fact that tenants were not able to access Scottish choices until the start of the second assessment period was also viewed as reducing its potential impact on arrears, since tenants might fall into arrears before reaching this point.
• Private landlords were much more positive about direct payments (although this was not always based on direct experience of them). One view was that it ought to be compulsory for rent to be paid direct to landlords for tenants on Universal Credit.
• Landlords generally saw the More Frequent Payments option as having no impact for them one way or another, although there were some concerns about whether people on this option would save enough money for monthly rent payments.
• Other perceived impacts of Scottish choices for landlords included: impacts on landlord-tenant relationships, with views varying on whether they had been positive, negative or neutral in this regard; impacts on administration; and impacts on the support social landlords in particular needed to provide to tenants.

This chapter examines how landlords feel Scottish choices have affected them. It covers the following research questions, as well as exploring other potential impacts, such as changes to their relationships with tenants:

• Is there any evidence among landlords that Universal Credit Scottish choices help Universal Credit recipients pay rent on time?
• Are there differences in terms of the above depending on a type of landlord (i.e. social, private)?

Awareness and understanding of Scottish choices among landlords

Overall, social landlords reported much higher levels of understanding than private landlords of Scottish choices. Ninety per cent of social landlords who responded to the landlord survey said they knew 'a lot' or 'a fair amount' about the scheme. In contrast, only 11% of private landlords said the same - 68% of private landlords said they knew only 'a little' or knew 'nothing at all' about it. These findings were reflected in the qualitative interviews with landlords.

Social landlords tended to be highly aware and generally very well informed about both Scottish choices, although in most cases the Direct Payments to Landlord choice was more central to their work with tenants. They had found out about Scottish choices through: membership of various networking groups (such as the Scottish Housing Network's Welfare Reform Forums); regular contact with Work Coaches and Case Managers about their tenants on Universal Credit; and through bulletins and newsletters sent to them as social landlords (for example, from the Scottish Government, or the Child Poverty Action Group). Their knowledge of Scottish choices in some cases pre-dated their introduction, as they had been involved in early discussions about how they might work.

Among the private landlords who took part in qualitative interviews, awareness of Scottish choices was mixed, but overall, they tended to be much less fully informed about both options compared with social landlords. Where they did know something about Scottish choices, this tended to relate to Direct Payments to Landlords - if they had heard of the More Frequent Payments option, they had not investigated it further, as it was not seen as particularly relevant to them. Although there were examples of private landlords hearing about the Direct Payments option through emails or newsletters from the Scottish Government or Scottish Landlord Association, in general they tended to have found out about this option in a more ad hoc way - for example, through word of mouth from other landlords, or because they had themselves looked into possible options for dealing with problems when tenants were in arrears.

Landlord perceptions of the impact on arrears

The online survey of landlords conducted for this research asked those who said they had tenants who had opted to have their rent paid directly to their landlord (101 out of the 260 landlords who responded) what difference this had made to the timeliness of rent payments. Overall, 49% said they had been more likely to receive rent on time, 36% that they were less likely to receive it on time, and 4% that it made no difference (8% said it varied too much to say).

Again, there were striking differences between the responses of private and social landlords. Almost all (24 out of 27) of the private landlords who had tenants who were on a Direct Payments arrangement said it had meant they were more likely to receive payments on time. In contrast, social landlords were much more divided on the impact, with 34% saying they were more likely to receive payments on time, and 47% that they were less likely (11% said it varies too much to say, and the remainder were unsure or felt it made no difference).

These divisions were reflected in the views of the 20 social and private landlords interviewed in more depth for this study.

Perceptions of Direct Payments to Landlords among social landlords

The views of social landlords interviewed in depth for this study mirrored the division in their survey responses. Those who were positive about the impact of the Direct Payments to Landlord option tended to focus on the impact in securing their rental income and helping to mitigate the increase in arrears some of them reported having observed after the move to Universal Credit.

"I think from the point of view of our rental income being secured so that we can deliver the best service to customers, I think it is (a) really, really, good thing. Hand on heart I think there is probably a lot of social sector landlords south of the border that are quite envious of the fact that we have got Scottish choices in place."

(Landlord 4, Local Authority)

There was also a perception that setting up a Scottish choices Direct Payment arrangement - particularly where the landlord was able to get this in place in the first assessment period by applying directly to Universal Credit Case Managers - took less time to set up than an Alternative Payment Arrangement (APA), and therefore helped to avoid arrears developing from early in people's Universal Credit claim.

"Yes, it was definitely better… if these people are anxious about getting their payments themselves, if the Scottish choices hadn't been there, we would be two months into their Universal Credit claim before we could apply for the arrears direct to ourselves... I would say it had a huge impact on the initial arrears level accruing, because we're getting in there quickly with the Scottish choices, so the payments are coming through."

(Landlord 1, Local Authority)

However, in other cases, social landlords were very clear that tenants moving onto Scottish choices Direct Payments to Landlord arrangements had not resulted in a reduction in arrears. This was primarily linked to the issues with the payment system being used at the time the research was conducted. The gap between the date when individual tenants' rent was due and the date on which the bulk payment of all direct payments to the social landlord was received meant that tenants were often falling into arrears. In addition to creating problems for tenants when landlords chased them for arrears (as discussed in Chapter 4), this was creating considerable difficulties for social landlords in terms of managing their rental income. Although these arrears might be labelled as 'technical' - since they result from the payment system rather than a tenant actually defaulting on rent - social landlords indicated that it could be very difficult to distinguish between 'technical' and 'real' arrears. One large social landlord said it was impossible to say what the impact of Scottish choices had been on arrears, since there were so many 'technical' arrears it was almost impossible for them to "get a real figure at all" in terms of their current level of arrears among tenants on Universal Credit. Another commented that because of the mismatch between the dates rent is due, the dates tenants receive their Universal Credit, and the dates scheduled for bulk payments, it could take 4-10 weeks to get the first rent payment through the Direct Payments to Landlords scheme. During this time, landlords were reliant on the tenant's word that they were on Scottish choices Direct Payments but had no direct proof of this. This could lead to tensions between people in different roles at a social landlord, with tenant advisors reporting arguments with rent management colleagues over which accounts were in 'technical' rather than 'genuine' arrears.

Social landlords were also critical of the 'data flow' from the DWP to landlords, which they felt impacted on their ability to effectively manage their rental income due to:

• a lack of information ahead of payment of what will be paid, when, and for whom
• not being able to distinguish between payments that are made under Scottish choices vs. APAs in the information they receive with payments from the DWP, and
• not being notified when a Scottish choices Direct Payment arrangement is cancelled.

These latter two points in particular were viewed as having additional knock-on impacts for arrears. Both social and private landlords identified the option for tenants to end a Direct Payment to Landlord arrangement without informing them (and without the DWP notifying them) as problematic, since it could result in arrears building up before they were able to intervene to avoid this:

"If that tenant has a change in circumstances, we don't get notified that there is an end of that arrangement. So, if it gets to the 13th of November and that rent money doesn't come into us, as I said, we've got £800 of rent [arrears] that we are then only starting, two weeks before the next rent is due to go in, to start and chase."

(Landlord 10, Housing Association)

It was also indicated that there had been cases where the landlord had requested an APA for a tenant they felt was at risk of arrears, and had only realised that the arrangement applied had actually been Scottish choices when the tenant cancelled this option and fell into arrears. There was a general perception among social landlords that the flow of information from the DWP to landlords had been much clearer when their tenants were on Housing Benefit.

The quote below (from a Key Informant in the housing sector) illustrates the negative consequences some social landlords attributed to the payment system and the information flow from the DWP which accompanied this:

"What happens is the money is taken from the tenant and it is kept by the DWP, held over until they do their next bulk payment to the landlord which can be a number of weeks further down the line. The problem with that is… it could be up to 12 weeks before the landlord gets a payment. The information that they get from the DWP is scant… Then you eventually get the money and then you have to wait another few days before you get a schedule, a paper schedule, which tells you how that bulk payment needs to be divided up between the individual rent accounts."

(Key Informant 13)

Finally, although, as noted above, there was evidence that some social landlords had been able to arrange Scottish choices Direct Payments to Landlords for tenants in the first assessment period, for others the delay in tenants being able to access this option curtailed the potential impact of Scottish choices on arrears. Social landlords also commented that the initial five-week wait for Universal Credit, combined with the fact that claimants often took an advance to get through this period, meant that they might miss their rent payment in the first assessment period, and therefore be in arrears prior to Scottish choices even becoming an option.

"I think the difficult part of that is the fact that the first payment goes to the tenants and it's very difficult to get around that, so we have quite a lot of tenants who have got arrears deductions in place and various other arrangements in place, because it's taken so long to get things started. But once it's in place it's fine and it ticks over and that's great, but actually getting to that point, even when you know, (you have) Scottish choices and everything else, it's not straightforward."

(Landlord 9)

Will the new payment system solve the problems?

As discussed in Chapter 2, a new payment system for paying rent to landlords was being rolled out by the DWP at the time of writing. A social landlord who worked in a pilot area for the new system and had experienced it already was very positive about the impact of this, and said they now routinely recommended the Direct Payments to Landlords option to their tenants. Another said that once the new payment system was introduced, they would move from discouraging tenants from taking up this Scottish choice, to encouraging everyone to take it up. Similarly, a key informant working with the housing sector described the new payment system as a "game changer", saying:

"…the feedback from a handful of housing associations that have been trialing the new system they were ecstatic… when that new system comes in it will dramatically change the effectiveness and the usefulness of direct payments."

(Key informant 13)

However, while social landlords generally expected the new payment system to make a significant difference to the timeliness of rent payments, it was less clear that it would fully resolve all the issues identified above. In particular, it was suggested that even with the new payment system, issues would remain around:

• The impact of both the five-week wait, and the Direct Payments option not being available until after the end of the first assessment period, both of which were seen as limiting the ability of Scottish choices to prevent arrears accruing early in a Universal Credit claim
• The information shared by the DWP with landlords - the landlord who had experienced the new real time payments system noted that the information in the system still did not enable them to easily identify when tenants move on and off Scottish choices, or whether they are on a Direct Payments to Landlord arrangement or an APA.

It was also commented that unless the dates on which the DWP makes rent payment align with the dates by which a person's rent is due, there is still scope for some claimants to fall into 'technical arrears' when on Scottish choices.

Perceptions of Direct Payments to Landlords among private landlords

As noted above, private landlords who completed the online survey were generally positive about the impact direct payments have on arrears. This was echoed in more in-depth interviews with private landlords. Only two of the private landlords we spoke to had direct experience of tenants who had opted for a Direct Payment to Landlord arrangement. However, regardless of whether they had direct experience of it, private landlords tended to be very positive about the option in principle (and, for the two with direct experience, in practice) as a way to reduce the potential for arrears.

"If I had another tenant like that (on Universal Credit), given the nature of the new regulations, I would be very happy to have DPL - I think the balance of legislation is now in favour of the tenants, and anti-landlord. So, I would be happier to have this in place from the start if (I had) another on Universal Credit, as it reduces the likelihood or risk of a tenant not paying rent."

(Landlord 15, Private)

Private landlords described how difficult they found it when a tenant is in long-term arrears, especially if legal proceedings were involved. The DWP being able to make payments direct to landlords was viewed as an important step forward in avoiding this. In fact, one view among private landlords was that where tenants were receiving a housing element to their Universal Credit, it ought to be compulsory that this was paid direct to their landlord from the start. Landlords explained this stance with reference both to the vulnerabilities of some tenants who may not cope with paying rent themselves (and were therefore ending up at risk of eviction), and a desire to secure their own income as a landlord and prevent the stress and cost to them of long terms arrears (including court proceedings and evictions). There appeared to be less appreciation among private landlords of the idea that Universal Credit should give people the option to manage their income themselves. As one landlord - who asked all their tenants on Universal Credit to opt for Direct Payments to Landlord when they started renting from them - put it:

"Why put the temptation [to spend their rent money] in front of them?"

(Landlord 6, Private)

Private landlords who did have experience of tenants on Direct Payments to Landlords appeared to be less impacted by the issues relating to the payment system reported by social landlords. However, it was noted that payment dates not being aligned with the dates rent was due did create additional administration for private landlords too.

Perceptions of the impact of More Frequent Payments on arrears

Unsurprisingly, both private and social landlords had far less to say about the More Frequent Payments option than about Direct Payments to Landlords. There was a view that whether their tenants opted to receive more frequent payments had little or no impact for them as landlords. The only exception to this was a concern, noted in Chapter 3, about whether tenants would be able to save a portion of their income from their first payment until later in the month to cover their rent. As already noted, one view (from a social landlord) was that landlords should always try and ensure a tenant's rent was paid directly to them (via APA or Scottish choices) if they had chosen More Frequent Payments.

Other impacts for landlords

Landlords were also asked whether they felt that Scottish choices had any impact on their relationships with tenants. Their responses again focused on the impact of the Direct Payments to Landlord option, with views tending to fall into one of three camps. One view (among social landlords) was that the extra support required had brought them closer to their tenants; another was that the issues the payment system had caused around technical arrears had impacted negatively on relationships with tenants; and a third was that it is impossible to isolate the impact of Scottish choices specifically from the impact of Universal Credit on tenant-landlord relationships more generally.

Those who felt there had been a positive impact on the tenant-landlord relations talked about the benefit of being able to empower tenants to make a choice, rather than having no option other than imposing an APA on them if they were struggling with rent:

"…it's [DPL] quite good because it's empowering the claimant to make that choice… we're not going in heavy handed and saying, 'well look, we're going to have to put an APA in place for this', because it is not normally at that stage… we try to explain to them, 'this is your home, you know you want to safeguard it, you want to make sure you don't fall behind, you have the choice to apply for that'."

(Landlord 1, Local Authority)

It was also suggested that the nature of the impact Scottish choices have on tenant-landlord relationships might vary depending on people's roles within social landlords - for example, relationships between tenants and staff providing welfare rights advice may have benefited from the support the latter are able to provide around Scottish choices, whereas relationships between tenants and Housing Officers, or Rent Arrears Officers, might be more negatively impacted by the issues with the payment system, discussed above.

Private landlords tended either to feel that Scottish choices had little or no impact on landlord-tenant relationships, or that it had a positive impact via avoiding arrears and the subsequent strain these created for tenant-landlord relationships:

"If the rent was… ring fenced, then it can't be used for anything else, then the rent is paid, it's guaranteed... Over a long period of time [if rent isn't paid], the goodwill towards the tenant, do you maintain it? Or do you go, 'actually this tenant has proved consistently unreliable… we don't want to have this arrangement with this individual anymore, so we're going to serve notice on them'?"

(Landlord 7, Private)

Besides the impacts covered above, the most notable impact for landlords, mentioned primarily by those in the social sector, was the additional administrative effort needed to work with the payment system and the additional support required to help tenants benefit from Scottish choices. These were reported to have had major resource implications for some Housing Associations and Local Authorities - for example, having to set up their own spreadsheets to calculate payment dates, and having to intervene to prevent automatic arrears letters from being sent. As noted above, the new payment system was viewed as a very significant step forward in reducing these issues, although it was not clear if it would resolve every issue raised by landlords.