Rent Arrears increase with Universal Credit

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Rent Arrears:

Just under two-thirds of private landlords housing tenants receiving Universal Credit (UC) have experienced rent arrears, that’s according to new research carried out for the Residential Landlords Association (RLA).

Based on responses from over 2,200 landlords, the Residential Landlord Association’s research exchange, PEARL, has finds that 61 per cent of those landlords samples, with tenants on Universal Credit, have experienced them going into rent arrears. This figure is up from 27 per cent in 2016.

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

Over half (53 per cent) 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 (APA).

Where successful it took, on average, over 2 months for this to be organised, on top of the 2 months arrears already accrued. This has caused arrears to build up substantially.

Those landlords that have to wait for 2 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 2 months arrears accrued, means that landlords are on average owed 4 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 UC.

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, where it is best for them, to have the housing element of UC 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.

RLA Policy Director, David Smith, commented:

“Our research shows clearly that further changes are urgently needed to Universal Credit.

“We welcome the constructive engagement we have had with the Government over these issues but more work is needed to give landlords the confidence they need to rent to those on Universal Credit.

“The impact of the announcements from the autumn budget last year remain to be seen. However, we feel a major start would be to give tenants the right to choose to have payments paid directly to their landlord. This would empower tenants to decide what is best for them rather than being told by the Government.�

The Residential Landlords Association: The home for landlords –  represents the interests of landlords in the private rented sector across England and Wales.

The research findings are based on the RLA PEARL’s latest quarterly survey to which 2,234 landlords responded. The full report can be accessed here  It found that:

• Of those landlords with tenants on Universal Credit, 61% experienced them going into rent arrears in the past 12 months. This is up from 38% last year and 27% in 2016.
• The average amount owed by Universal Credit tenants in rent arrears has increased by 49% in comparison to the previous 12 months. It has increased from £1,600.88 in 2017 to £2,390.19.
• 53% of landlords with Universal Credit tenants reported that they had requested an Alternative Payment Arrangement (APA) and of these, 57% reported that it had been successful. Furthermore, 53% of landlords reported that they had included a claim for the repayment of rent arrears in the APA. Respondents were then asked how easy they had found the APA application process, 51% of landlords reported they had found it difficult or very difficult. Respondents were asked how long on average it took them to have the APA arranged. On average, landlords reported that it took 9.3 weeks for direct payment under the APA to be arranged, with the maximum reported to be a full year.
• 22% of landlords reported that their mortgage lender prevented them from renting homes to tenants in receipt of benefits.

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