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Latest research from Peabody has shown that two thirds of those on Universal Credit are behind on their rent.
The figures show that of the 11,000 tenants on Universal Credit, 67% are in arrears and have built up an average debt of £1,200.
A quarter of those in arrears are more than two months behind, analysis of its accounts shows, meaning they risk building up “unmanageable debt”.
On average, those claiming Universal Credit have arrears almost 70% higher than those of working age residents not claiming the benefit.
Peabody has blamed the five-week wait for a first payment, additional delays, mispayments and difficulties in the claims process for increasing levels of rent arrears and new mental health problems.
Peabody saw the number of its residents claiming Universal Credit more than double between March and October last year with 6,000 new claimants.
It expects this to rise when the furlough scheme ends.
Peabody also surveyed 450 residents who started claiming Universal Credit during the pandemic and found just 15% of those who lost their jobs during the crisis have found paid work again.
Around a quarter of respondents who put in new claims said that they had to wait longer than five weeks for their first payment – causing some to run out of money.
Nearly one fifth said that they found the system either fairly or very difficult to navigate.
One in 10 respondents reported suffering from missed payments, 10% reported payment delays, and 9% reported communications issues.
A fifth of new claimants said the experience had affected their mental health – of which 44% said they had developed a new mental health problem and 31% said an existing condition had worsened.
Chair at Peabody, Lord Bob Kerslake, said: “That the Universal Credit system has not collapsed under the strain of millions of new applications is positive.
“However, the experience of the majority of people making a claim shows that the system is still failing to provide adequate support.
“The difficult times are set to continue for some time yet so it is really important that the Government gets a grip of the problems as other financial support winds down.
“We urge ministers to bring forward a comprehensive improvement plan so that Universal Credit can provide the safety net that is desperately needed in these challenging times.”