The Government’s flagship Universal Credit (UC) system is pushing a growing number of private sector tenants into rent arrears, with the number falling behind on payments rising by 10% over the last year.
A survey of almost 3,000 landlords by the Residential Landlords Association (RLA), who represent landlords in the private sector across England and Wales, found that 38% of tenants in receipt of UC experienced rent arrears in the last year – up from 27% in February 2016.
The average amount of rent arrears owed by private tenants to their landlords is now £1,150, with the RLA blaming the long wait before UC claimants receive their first payment.
UC replaces a number of existing benefits and tax credits with one single monthly payment. Under the new system, financial support for housing costs is typically paid directly to the claimant rather than their landlord.
Landlords, both in the private and public sector, can ask for rent payments to be sent directly to them, but the RLA say the process of arranging ‘direct payments’ with the Department for Work and Pensions is often difficult and too slow.
The government is accelerating the roll-out of UC from 5 areas to 50 areas a month from October. But the RLA say that without urgent reform to the system, the accelerated roll-out could lead to a “ticking timebomb” for tenants and deter landlords from renting properties to people in receipt of UC.
The association is calling on the government to urgently reduce the minimum seven-week waiting period, and make it simpler and quicker for rent payments to be made directly to landlords.
RLA Vice Chairman, Chris Town, said: “Whilst we continue to welcome the principle of simplifying the benefit system, it cannot be right that as it is currently designed, Universal Credit is leading many more tenants into rent arrears.
“This is not financially responsible and does nothing to encourage landlords to house people needing to claim benefit.
“We have already met with the Minister and are heartened that the department understands the need to address the problem of rent arrears. With just weeks to go before the roll out of Universal Credit gathers pace we need action sooner rather than later.”
The call echos the recommendations made by campaigners, social housing landlords, charities and MPs from across the political spectrum.
Citizens Advice recently described the plan to accelerate the roll-out of UC, without first fixing flaws in the system, as “a disaster waiting to happen“.
An analysis of over 50,000 cases where the charity had helped people with debt problems found that 79% of UC claimants have priority debts such as rent and council tax arrears.
The charity also found that around 2 in 5 UC claimants have no money available at the end of each month to pay creditors after living costs.
Citizens Advice Chief Executive, Gillian Guy, said: “The roll-out of Universal Credit is a disaster waiting to happen.
“While the principles behind Universal Credit are sound, our evidence shows that if the government continues to take this stubborn approach to the expansion of Universal Credit, it risks pushing thousands of families into a spiral of debt, and placing an even greater strain on public services.
She called on the government to pause the roll-out of UC to allow time to fix “underlying problems”, so that households “are less likely to fall into arrears.”
“The government should also ensure that everyone has access to the support they need to adapt to Universal Credit”, she added.