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Tenants on universal credit falling behind with rent

23 August 2019

Universal Credit is causing tenants to fall into rent arrears, according to new research for the Residential Landlords Association.

The RLA reports that 54% of private landlords who have let to tenants on universal credit in the past 12 months have seen them fall into rent arrears - and 82% of these said the arrears only began after the tenant claimed universal credit or was moved to universal credit from housing benefit. Two thirds of landlords said that there was a shortfall between the rent due and the amount paid in universal credit.

Although private landlords renting to universal credit claimants can apply to have the housing element paid directly to themselves when a tenant has reached two months of rent arrears under an alternative payment arrangement (APA), the research found that it took an average of eight and a half weeks for an APA to be arranged, and some landlords faced four months of rent arrears before they began to receive rent under the APA.

According to the most recent figures, 45% of households receiving universal credit with support for housing costs are in the private rented sector. However more than a third (36%) of landlords said they had buy-to-let mortgage conditions which prevented them from renting to benefit claimants.

The RLA is calling on the Government to do more to prevent rent arrears occurring, including by giving all tenant claimants the ability to choose to have the housing element paid directly to their landlord from the outset, and ending the five week waiting period to receive the first universal credit payment.

David Smith, RLA policy director, commented: “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.”

A DWP spokesperson said the number of landlords reporting universal credit tenants experiencing rent arrears had fallen over the last year, and the department was continuing to work closely with landlords and tenants to make improvements to universal credit where necessary.