The roll out of the government’s flagship benefit reform is causing financial difficulties for landlords as tenants receiving Universal Credit struggle to budget for rent and face delays in payments.
Universal Credit is intended to simplify the existing benefits system by consolidating a range of benefits, including housing benefit, into a single monthly payment. Previously housing benefit was paid directly to a renter’s landlord, but under the new system recipients are intended to be in control of their own money.
However, lengthy waiting times before an applicant can receive their first payment, administrative issues and problems budgeting for priority expenses, such as rent, has led to many people receiving Universal Credit falling into arrears.
According to the Residential Landlords Association, 38% of landlords with tenants receiving Universal Credit are owed rent, an increase of 10% on last year.
In an interview with the Guardian, one Croydon based landlord has revealed that she has been left with £9,500 in arrears after a tenant on Universal Credit was unable to keep up with their payments.
The landlord, who preferred not to be identified by her real name, said the council who arranged the tenancy had given her assurances that the rent would be covered by housing benefit. In January, however, the tenant was switched to Universal Credit and rent payments ceased.
Since then she has been unable to recover the arrears owed to her, leaving her £9,500 in debt.
Richard Lambert, chief executive of the National Landlords Association, said; “Underlying all the problems with Universal Credit is the freeze on housing benefit rates, which means that the housing element of Universal Credit is simply insufficient for many tenants to be able to cover their rent.”
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