PRS tenants falling into arrears under Universal Credit

In news that won’t much surprise anyone even dimly acquainted with Universal Credit (UC), it appears the government’s flagship reform of the benefit system is causing PRS tenants to fall behind with their rent.

According to new research commissioned by the Resident Landlords Association (RLA), 54% of private landlords who've let to tenants on UC in the past 12 months have seen some fall into rent arrears.

And 82% of those said that the arrears only began after a new claim for UC or after a tenant had been moved to it from housing benefit.

Despite the government originally maintaining that a fundamental aspect of UC would see benefits paid to claimants rather than directly to landlords, reality swept in long ago and a number of concessions have been made.

Thus, PRS landlords can apply to have UC’s housing element paid directly to themselves when a tenant has reached two months of rent arrears, known as an Alternative Payment Arrangement (APA).

Among landlords with renters in receipt of housing benefit, 62% said they were worried that their tenants might not be able to afford to pay their rent after migrating to UC.

The research also reveals that 36% of landlords said their buy-to-let mortgage conditions prevent them from renting to benefit claimants.

The RLA is now calling on the government to do more to prevent rent arrears by:

  • Giving all tenants from the start of a UC claim the choice to have the housing element paid directly to their landlord
  • Ending the five-week waiting period to receive the first UC payment
  • Ending the Local Housing Allowance freeze to ensure it reflects the realities of PRS rents

The RLA says the most recent statistics show 45% of households receiving UC with support for housing costs are in the PRS.

David Smith, RLA policy director, said: ‘Today’s research shows the stark challenges the government still has in ensuring Universal Credit works for tenants and landlords.

‘The system only provides extra support once tenants are in rent arrears. Instead, more should be done to prevent tenants falling behind with their in the first place.

‘Only then will landlords have the confidence that they need that tenants being on Universal Credit does not pose a financial risk that they are unable to shoulder. Without such changes, benefit claimants will struggle to find the homes to rent they need.’

And it would only be fair to hear what the DWP has to say about all this. A spokesman said: ‘Many people join Universal Credit with existing rent arrears, but this number falls by a third after four months, and the number of landlords reporting Universal Credit tenants experiencing rent arrears has fallen over the last year.

‘The best way to help people pay their rent is to support them into work, and Universal Credit is helping people to get into work faster and stay in work longer than the old system.

“We continue to work closely with landlords and tenants to make improvements to Universal Credit where necessary, including 100% advances available from day one of a claim.’