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Universal Credit will Lead to Rent Arrears
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
A leading law firm is predicting alarming rises in rent arrears with the imminent arrival of the new Universal Credit. Winckworth Sherwood suggests that arrears could rise by an average of £180 per tenant when the scheme is introduced.
Universal Credit will Lead to Rent Arrears
Universal Credit
Universal Credit is due to give the benefits system a complete overhaul. Merging several benefits and tax credits into one monthly payment, Universal Credit will also see housing benefit paid directly to tenants, and not landlords.
Winckworth Sherwood and other industry figures are concerned that one monthly payment will lead to a substantial increase in rent arrears, with tenants in social housing particularly struggling to adapt to the changes.
Pilot
Research from Winckworth Sherwood into a pilot of the scheme in Southwark during the early part of this year found that many tenants who had never previously experienced arrears were in debt by the end of the trial. Debts were on average £180.[1]
Trialling the scheme were 1,500 local authority tenants, with 500 from a housing association. Results showed that just 60% of tenants successfully adapted to the changes, with the remaining 40% unsuccessfully maintaining their budgets.[1]
11% of tenants involved in the trial refused or could not engage with their local authority, with 14% deemed unsuitable for the trial on vulnerability grounds.[1]
Concern
Nikki Lynds-Xavier, Winckworth Sherwood Housing Management Team Partner, described the findings of the report as, “worrying for housing associations.” She went on to suggest that further pilots of the scheme have shown that “housing officers have to make upwards of 40 visits in each case when chasing rent arrears, compared against six under the current system.”[1]
Lynds-Xavier adds that as a result, “this adds an enormous administrative burden and cost for those providing social housing.”[1]
[1] http://www.insidehousing.co.uk/rent-arrears-to-go-up-180-under-universal-credit/6526711.article
