Arrears rocket for tenants on Universal Credit

Around two thirds of private landlords with tenants receiving Universal Credit have experienced rent arrears according to new research.

Based on responses from over 2,200 landlords, the Residential Landlord Association’s research exchange PEARL has found that 61 per cent of landlords with tenants on Universal Credit have experienced them going into rent arrears. 

This is up from 27 per cent in 2016.

The research found that on average Universal Credit tenants in rent arrears owed almost £2,400, a 49 per cent increase compared to last year.  

Over half of landlords with tenants on Universal Credit applied for direct payment to be made to them instead of to the tenant, known as an Alternative Payment Arrangement or APA.

Where successful it took, on average, over two months for this to be organised, on top of the two months arrears already accrued. This has caused arrears to build up substantially, the RLA says.

Those landlords that have to wait for two months arrears before they can apply for direct payment are reporting that on average the APA process takes 9.3 weeks. 

This when added to the initial two months arrears accrued means that landlords are on average owed four months’ rent before they are successfully awarded direct payment. 

The RLA is calling for the APA process to be improved as a matter of urgency, particularly before managed migration begins next year and more families and complex cases are moved onto Universal Credit.

One fifth of landlords also reported that their mortgage lender prevented them from renting homes to tenants in receipt of benefits.

The RLA is calling for tenants to be able to choose whether to have the housing element of Universal Credit paid directly to the landlord.

It is calling also for private landlords to be given more information about a tenant’s claim, such as when they receive payments, where this is in the best interest of the tenant to sustain the tenancy so that suitable rent payment schedules can be arranged. At present, this is provided to social sector landlords, but not to those in the private sector.

Formal mechanisms should also be put in place to enable landlords to reclaim rent arrears where UC tenants leave a property owing rent, the association says.