A Lincolnshire property company has threatened all of its tenants with eviction if they fail to pay their rent because of delays in receiving universal credit payments, sending all tenants pre-emptive notices ahead of the rollout of the welfare reform.
The letter from GAP Property in Grimsby was highlighted by Jeremy Corbyn in his weekly clash with Theresa May at prime minister’s questions. Corbyn said tenants of the property management company faced the prospect of being made homeless before Christmas. May said she would look into the “particular case” raised by the Labour leader.
GAP Property said the changes would affect the vast majority of its tenants and it needed to take action to avoid a slew of rent arrears.
Universal credit is due to be rolled out across north-east Lincolnshire from 13 December and new applicants will have a minimum six-week wait for their first payments, though many have reported longer delays.
What is universal credit?
Universal credit is the supposed flagship reform of the benefits system, rolling together six benefits (including unemployment benefit, tax credits and housing benefit) into one, online-only system. The theoretical aim, for which there was general support across the political divide, was to simplify the benefits system and increase the incentives for people to work, rather than stay on benefits.
How long has it been around?
The project was legislated for in 2011 under the auspices of its most vocal champion, Iain Duncan Smith. The plan was to roll it out by 2017. However, a series of management failures, expensive IT blunders and design faults have seen it fall at least five years behind schedule.
What is the biggest problem?
There is a minimum 42-day wait for a first payment endured by new claimants when they move to universal credit (in practice this is often up to 60 days). For many low-income claimants, who lack savings, this in effect leaves them without cash for six weeks. The well-documented consequences for claimants of this are rent arrears (leading in some cases to eviction), hunger (food banks in universal credit areas report striking increases in referrals), use of expensive credit, and mental distress.
Are there other problems?
Plenty. Landlords are worried about the level of rent arrears racked up by tenants on universal credit. Unchecked, this will lead to a spike in evictions. Claimants complain that universal credit is bafflingly complex, unreliable, and difficult to manage, particularly if you are without internet access. Multibillion-pound cuts to work allowances imposed by the former chancellor George Osborne mean universal credit is far less generous than originally envisaged. According to the Resolution Foundation thinktank, about 2.5m low-income working households will be more than £1,000 a year worse off when they move on to universal credit.
The letter from the agency, seen by the Guardian, says it is “not intended to cause alarm, rather to inform you of the problems that could very well occur during the rollout of universal credit”.
It calls the flagship welfare reform “an extraordinary event that requires both you and us to take extraordinary measures”.
It tells tenants: “GAP Property cannot sustain arrears at the potential levels universal credit could create (this affects the vast majority of our tenants), therefore we find it necessary to issue your Notice Seeking Possession … that has been enclosed to be exercised only in the event that you fail to pay your rent in accordance with the terms of your tenancy (in full and on the due date).”
The letter warns tenants will face eviction if there is a delay in payment to the landlord. “IF YOU DO NOT PAY YOUR RENT WE WILL HAVE NO OPTION BUT TO ASK YOU TO LEAVE AND RECOVER LOSSES FROM YOUR GUARANTOR,” it writes, in capital letters.
The letter also includes a formal notice of possession as well as a guide to universal credit for tenants.
The company’s website says the agency was established more than 30 years ago by Guy Piggott, chair of the local Humber Landlords Association, with a “wide range of properties from rooms in shared houses, flats, to five-bedroom detached houses”.
Quoting from the letter during PMQs, Corbyn said: “Will the prime minister pause universal credit so it can be fixed? Or does she think it is right to put thousands of families through Christmas in the trauma of knowing they are about to be evicted because they are in rent arrears because of universal credit?”
In response, May said she wanted to “look at the issue of this particular case” but said the government wanted people to be able to manage their own budgets.
“There have been concerns raised over the issue of people being able to manage their budgets to pay rent,” she said. “What we see after four months is that those on universal credit in rent arrears has fallen by one-third.”
guardian.co.uk © Guardian News & Media Limited 2010