With the Universal Credit scheme continuing its rollout across the UK, landlords will be keen to learn which areas will be affected the most by the housing benefit changes.
Online estate agent Urban.co.uk has analysed the top five UK towns that could see the greatest impact from Universal Credit.
Under the new scheme, landlords are no longer paid housing benefit directly; instead, the tenants will be responsible for paying their rent. This has caused many landlords to be more reluctant to rent to those on benefits.
If you do decide to let to tenants on benefits, we have a guide to help you: https://www.justlandlords.co.uk/news/a-guide-to-letting-to-dss-tenants/
In the UK, a total of 4.7m people receive housing benefits, with 1.5m of these living in the private rental sector.
Based on the percentage of benefit claimants who are reliant on private rental housing, Urban.co.uk has calculated which areas will be most affected by Universal Credit changes.
If you are a landlord with properties in the following areas, be aware that any tenants you have on benefits will be facing changes to their financial circumstances. The figures show how many benefit claimants live in the private rental sector:
- Blackpool – 72%
- Torbay – 68%
- Tendring – 65%
- Castle Point – 63%
- Bournemouth – 62%
In Blackpool, a huge 72% of the town’s 18,886 housing benefit claimants rent a privately owned property. Interestingly, all of the towns in the top five are coastal spots.
The areas with the lowest percentage of claimants reliant on the private rental sector are as follows
- City of London – 2%
- Shetland Islands – 4%
- Islington – 10%
- Aberdeen City – 10%
- Southwark – 11%
The City of London has one of the lowest numbers of benefit claimants in the UK, so it is no surprise that it takes the top spot of areas least likely to be affected by Universal Credit. Contrastingly to the top five areas that will be affected, these spots are all inner city locations.
The co-founder of Urban.co.uk, Adam Male, says: “The introduction of Universal Credit and the uncertainty surrounding it is definitely causing concern for many landlords. However, it is important to remember that there will always be a requirement for social housing, and the changes to the social housing landscape may offer many landlords light at the end of the gloomy tunnel.”
He offers his opinion on renting to benefit tenants: “Letting property to tenants on benefits is a very different kettle of fish to a private tenant, but it’s not a painful system. And when done correctly, can lead to a great long-term tenancy!
“Universal Credit will definitely change things in the short term, and it is true that whilst the system finds its feet and tenants get used to being in full control of their own money, there may be some bumps in the road, however, the figures speak for themselves – the system is reliant on private landlords, and as long as they are supported, they will continue to support the system.”1
With many problems surrounding the new scheme, such as tenants falling into long-term debt, it is vital that you protect your rental income if you already, or decide to, let to benefit claimants.
The best way to make sure you still get paid if your tenant defaults on the rent is to have Rent Guarantee Insurance in place, which will ensure peace of mind.