Revealed: The true impact of Universal Credit on the rental market

9 Jan 2018 10:51 AM

AS Members of Parliament prepare to debate the impact of Universal Credit on the private rented sector, research finds that 73 per cent of landlords still lack confidence in renting to tenants on the Credit due to uncertainty that they will be able to recover rent arrears.

The Residential Landlords Association (RLA) today reveals the stories behind the statistics to take a look at the true impact of the Government’s flagship welfare policy on tenants and landlords, highlighting the need for further reforms to the way the Credit is delivered.

Brandon Taylor from Lowestoft provides homes to rent to around 130 Universal Credit claimants, of which 70 per cent are struggling to pay their rent in full and on time.  In one extreme case, a tenant who was on Universal Credit accrued £2,848 in rent arrears. Where tenants accrue 2 months or more of rent arrears, landlords can apply for payments to be made directly to them, known as Alternative Payment Arrangements. When he has applied for this, Brandon has found requests to the Department for Work and Pensions have been ignored. Brandon warns that landlord confidence in Universal Credit has been damaged and that it will take years to regain that confidence back.

Linda Hazelwood, a landlord in the West Midlands, has told the RLA of a tenant in receipt of Universal Credit who she rents to in Halesown. The tenant is a young single mother who has just had another baby. Having been a tenant for at least five years, she now owes her landlord over £1000 in rent. Linda says that the tenant does not want to be in arrears, but cannot afford to pay the rent on time. Another tenant of Linda’s in receipt of the Credit has accrued £900 of arrears. Expressing her frustrations about the system, she has warned that it is not doing enough to support those tenants, especially the vulnerable, who do not have access to computers in order to process and manage Universal Credit payments.

Sue Thompson and her husband Phil rent properties out across the North East of England, 90 per cent of her tenants are in receipt of benefits, many of whom are in receipt of Universal Credit. She has noted that although the Government has slightly reduced the time between applying and receiving Universal Credit, paying tenants in arrears means that many are forced to “beg, steal or borrow” to keep going.  She warns that in such cases a tenants’ first payment is then swallowed up by repaying those debts often with high levels of interest or late fees with the vicious cycle of rent arrears starting all over again.

The stories come as the Liberal Democrat’s Work and Pensions Spokesperson, Stephen Lloyd MP, today initiates a debate in Parliament on the impact of Universal Credit on the private rented sector.

The RLA is making a number of proposals which would improve the delivery of Universal Credit for both tenants and landlords.

These include ensuring private landlords are routinely informed when a tenant moves from the older benefit system to Universal Credit to help them to establish suitable rent payment schedules with tenants.

Mechanisms need to be put in place to give landlords confidence that rent arrears can be reclaimed after a Universal Credit tenant leaves a property.

Tenants should also be given the option to choose to have the housing element of Universal Credit paid directly to the landlord, if they wish.

RLA Vice Chair, Chris Town, said: “We welcome today’s debate and hope that MPs from all parties will agree that a few pragmatic changes to the way Universal Credit is delivered will lead to considerable improvements for both tenants and landlords.

“The RLA will continue to work with all sides to secure the benefit system we all want – one that is easy to understand, fair to all, supports the vulnerable and ensures the security of a home for all claimants.”