William Eichler 15 October 2018

Landlords warn Universal Credit driving tenants into rent arrears

Landlords warn Universal Credit driving tenants into rent arrears image

Almost two-thirds of private landlords with tenants receiving Universal Credit have experienced them going into rent arrears, a landlord association has revealed.

A survey of 2,200 landlords published by the Residential Landlord Association (RLA) has found that 61% of landlords with tenants on UC have experienced them going into rent arrears.

This is a 27% increase on the 2016 figure.

On average, the RLA’s research exchange PEARL discovered, UC tenants in rent arrears owed almost £2,400, a 49% increase compared to last year.

The Government’s flagship welfare reform, which merges six existing benefits into one, has come under increasing levels of scrutiny ahead of next years roll out. It will affect around three million people.

The reform, which has already been rolled out in some areas of the country, was described as ‘flawed’ last July after surveys of 118 housing associations in England, Wales, and Scotland revealed that their UC tenants are in £24m of rent arrears.

The director general of the UC programme, Neil Couling, also criticised the benefits reform last week in a letter seen by The MJ.

‘It is clear that despite the hard work, the service as currently configured is not providing consistent support nationwide as the feedback from claimants, their representatives and the NAO [National Audit Office] has shown,’ he wrote.

Private landlords are able to apply for direct payment of rent to be made to them instead of to the tenant. This is known as an Alternative Payment Arrangement (APA).

The RLA found that 53% of landlords with tenants on UC applied for APA. They reported it took two months to be organised, a delay which allowed arrears to build up substantially.

One fifth of landlords also reported that their mortgage lender prevented them from renting homes to tenants in receipt of benefits.

The RLA is calling for tenants to be able to choose, where it is best for them, to have the housing element of UC paid directly to the landlord.

‘Our research shows clearly that further changes are urgently needed to Universal Credit,’ said RLA policy director, David Smith.

‘We welcome the constructive engagement we have had with the Government over these issues but more work is needed to give landlords the confidence they need to rent to those on Universal Credit.

‘The impact of the announcements from the Autumn budget last year remain to be seen.

‘However, we feel a major start would be to give tenants the right to choose to have payments paid directly to their landlord. This would empower tenants to decide what is best for them rather than being told by the Government.’

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