Universal Credit Claimants Causing Landlords’ Rental Arrears
Universal Credit is undoubtedly causing many landlords rental arrears because of the amount of time it takes for a tenant on housing benefit to receive their first payment.
A trade association says that over half of landlords – 54% – in the last year have had to contend with rental arrears and 82% of those stated this had only occurred when their tenants on benefits, were switched to the new Universal Credit system.
68% of these landlords also said that the Universal Credit housing benefit was lower than their tenant’s original housing benefit allowance.
Landlords are able to access rental payments directly from the DWP, only when their Universal Credit tenant has fallen behind with their rent payments by two months so they can then apply for the Alternative Payment Arrangement (APA).
The association’s research found that it takes on average 8.5 weeks for a landlord to be accepted into the APA scheme. In many cases it caused landlords to be out of pocket for up to four months worth of rent, before they finally started to receive payments.
62% of landlords that have tenants receiving housing benefit are extremely concerned that when they are switched to Universal Credit, they will fall behind with their rent payments.
The survey also found that 36% of landlords said within their BTL mortgage conditions they would not be able to rent the property to housing benefit claimants.
The association is urging the government to make changes to the benefits system to wipe out rental arrears when recipients are switched to Universal Credit, which include:
• Giving all tenants from the start of a claim for Universal Credit the ability to choose to have the housing element paid directly to their landlord.
• Ending the five week waiting period to receive the first Universal Credit payment.
• Ending the Local Housing Allowance freeze to ensure it reflects the realities of private sector rents.
A spokesperson for the association, said: “Today’s research shows the stark challenges the Government still has in ensuring Universal Credit works for tenants and landlords.
“The system only provides extra support once tenants are in rent arrears. Instead, more should be done to prevent tenants falling behind with their in the first place.
“Only then will landlords have the confidence that they need that tenants being on Universal Credit does not pose a financial risk that they are unable to shoulder. Without such changes, benefit claimants will struggle to find the homes to rent they need.”
DWP spokesperson adds: “Many people join Universal Credit with existing rent arrears, but this number falls by a third after four months, and the number of landlords reporting Universal Credit tenants experiencing rent arrears has fallen over the last year.
“The best way to help people pay their rent is to support them into work, and Universal Credit is helping people to get into work faster and stay in work longer than the old system.
“We continue to work closely with landlords and tenants to make improvements to Universal Credit where necessary, including 100 per cent advances available from day one of a claim.”