As Members of Parliament prepare to debate the impact of Universal Credit on the private rental sector today, research shows that 73% of landlords still lack confidence in letting to tenants in receipt of benefits, due to uncertainty that they will be able to recover rent arrears.
The Residential Landlords Association (RLA) reveals the stories behind the statistics to take a look at the true impact of the Government’s new welfare policy on landlords and their tenants, highlighting the need for further reforms to the way that the system is delivered.
Brandon Taylor of Lowestoft provides homes to let to around 130 Universal Credit claimants, of which 70% are struggling to pay their rent on time and in full. In one extreme case, a tenant who was on Universal Credit accrued £2,848 worth of rent arrears.
The True Impact of Universal Credit on the Private Rental Sector
Where tenants accrue two months or more of rent arrears, landlords can apply for payments to be made directly to them, known as Alternative Payment Arrangements (APAs).
When Taylor applied for this, he found requests to the Department for Work and Pensions (DWP) were ignored. Taylor 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 that she lets 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 £1,000 in rent. Hazelwood says that the tenant does not want to be in arrears, but cannot afford to pay the rent on time.
Another tenant of Hazelwood’s in receipt of Universal Credit has accrued £900 in 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 their payments.
Sue Thompson and her husband Phil let properties in the North East of England. 90% of their tenants are on benefits, many of whom receive Universal Credit. Thompson 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 tenant’s 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.
Universal Credit changes
These stories arrive 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 rental sector.
The RLA is making a number of proposals that would improve the delivery of Universal Credit for landlords and their tenants.
These include ensuring that private landlords are routinely informed when a tenant moves from the older benefits system to Universal Credit, to help them establish suitable rent payment schedules with tenants.
The organisation also insists that 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.
It adds that tenants should be given the option to choose to have the housing element of Universal Credit paid directly to their landlord, if they wish.
The DWP has confirmed that landlords will no longer need their tenants’ consent when applying for APAs.
Chris Town, the Vice Chair of the RLA, comments: “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.”