Now, anyone who has read my previous posts (and there are not too many of you!) will know I like to bang on about this universal Credit system that the government is bringing in. In a nutshell (and this whole idea is nuts) the government want to pay all housing benefit payments direct to our tenants who then, beacons of financial shrewdness as they all are, will then pass this rent onto the landlord/agent.
Well here’s a curious thing…..we had a visit from our local credit union recently. They are encouraging our tenants who are in receipt of housing benefit (and will, therefore, endure the transfer to the Universal Credit system) to set up accounts with them, have their benefits paid into the account and then the credit union will pay the rent to the landlord. Seems a good idea?
To act as this middleman, the credit union will extract a fee from the landlord of up to 6%. There is nothing to pay up front – they will deduct it from the rent! Genius.
It also transpires that the government are directly financing the credit unions to set up such accounts (up to £1.85 million is available to each credit union*) and here the madness arises…
It is the Government’s express aim to have the tenant receive all their benefits into their own account, giving them the financial responsibility to deal with their own affairs in an attempt to prepare them for life in the workplace. Meanwhile, and at further cost to the tax payer, they are setting up these accounts so the tenant won’t get their hands on the benefits and someone will pay the rent on their behalf!
Universal Credit is going to cost the taxpayer £12.8 billion pounds to implement** and if landlords come on board with the credit unions – as they surely will to protect their income streams – then this terribly misguided scheme will merely bring us back to the status quo (Except for one thing of course – tenants will see an effective rise of 6% on their rents as landlords pass on the costs charged by the credit unions).
It’s not just me is it – this whole thing just sounds nuts?!
* Figures from http://www.abcul.org/media-and-research/news/view/348