Universal Credit: Report finds direct payments effective in curbing rent arrears

A report published today by the Smith Institute, commissioned by Southwark Council has found that direct payments of benefit to landlords contributed most to reductions in rent arrears.

The report findings show that there has been a noticeable decrease in the levels of arrears for those claiming Universal Credit in 2018, compared with those transitioning to Universal Credit in 2016. It notes that “it is the earlier and increased use of Alternative Payment Arrangements, rather than other reforms, which have contributed most to reductions in arrears levels observed’.

These findings support the RLA’s call that tenants in receipt of Universal Credit should have have the right to choose whether the housing element is paid directly to their landlord.

Responding to the findings of the report, RLA policy director David Smith said:

“Our own research finds that over half of landlords with tenants on Universal Credit have seen them fall into rent arrears in the last year.

“Today’s report demonstrates that arrears are lower under direct payments to landlords and supports our call for the Government to give all tenants on Universal Credit the ability to choose to have the housing element paid directly to their landlord.

“Many tenants feel more comfortable with managing their finances knowing that their rent is paid and it should be up to them to be free to make that decision”.

RLA campaigning

Currently, landlords can apply for an Alternative Payment Arrangement, but only after two months of rent arrears have built up.

The RLA has been campaigning for tenants who are in receipt of Universal Credit to have the right to choose whether the housing element is paid directly to their landlord.

Research published for the RLA in August found that 54 % of those private landlords who have let to tenants on Universal Credit in the past 12 months have seen them fall into rent arrears. The research also found that it took landlords an average of almost 8.5 weeks for an APA to be arranged.

This summer, plans to improve the Universal Credit system by ending the benefits freeze and promoting direct payments to landlords were put forward by a cross-party group of MPs.

Blog Post from Residential Landlords Association

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