In a joint report, published yesterday, the NFA and ARCH warn that Universal Credit is increasing the burden of rent debt on social housing tenants and landlords.
In their new report, ‘Carrying the debt, Measuring the impact of Universal Credit on tenants and landlords‘, NFA and ARCH express strong concerns over the length of time it takes tenants to establish control over their finances after being moved to Universal Credit.
The NFA and ARCH, who together represent over a million council homes, are calling on the UK Government to slow down the roll-out and fix outstanding problems with the new benefit system.
They are also urging the Government to move to payment monthly in advance, rather
than in arrears, to recognise that claimants often do not have a safety net to get them through the first month.
Key findings from the report include:
• Average arrears for UC households (£520) were one and a half times higher than arrears in general (£328). Nearly three quarters of UC households were in arrears (74%) compared with 26% of all households.
• The situation has not changed significantly since 2017 and many of the same problems remain.
• For tracked organisations there has been a total increase in debt of 12% up to £43.6 million; 25% of this debt is from UC households even though they only make up 4% of total households.
• The length of time it can take for tenants to clear the arrears built up in the transition to UC with the knock-on effects for both the tenants and landlord is very concerning, with evidence that it can take up to 24 months to clear the debt.
Eamon McGoldrick, NFA Managing Director: “We are pleased that the Government has listened to us and other partners and implemented changes to the UC system which should see improvements for tenants and landlords as the roll out progresses.
“We will continue to work with DWP to ensure our members’ experience and concerns shape the system.
“However, we still have deep concerns about the ongoing impact of UC on tenants, many of whom are already deeply vulnerable, and we are calling on the Government to fix the biggest flaw in the UC system, which is payment in arrears.
John Bibby, ARCH Chief Executive, said: “Our members are heavily investing in supporting tenants to successfully transition to UC, however the level of arrears debt being accrued is having a huge impact on Council HRAs, which are already under pressure.
“It will also not be possible to sustain the levels of intensive support to tenants as the roll-out continues and resources become increasingly stretched.
“For this reason, we are calling on the Government to provide sufficient transitional funding for landlords to enable them to effectively manage the roll-out and adequately support vulnerable tenants.”
A spokesperson for the Department for Work and Pensions said: “Rent arrears are complicated and they cannot be attributed to a single cause. Our research shows that many people join Universal Credit (UC) with pre-existing arrears, but the proportion of people with arrears falls by a third after four months in UC.
“This report recognises that we have made significant improvements to help claimants get support sooner and the impact of these changes is still to be felt.
“This includes removing the seven waiting days, making 100% advance payments available from day one and providing two weeks’ extra housing support for people joining UC from Housing Benefit, that doesn’t have to be repaid.”