With the Universal Credit Transition Rollout Scheme due to complete in December, most local authorities have now moved over to the service. However, there has been a response from landlords that tenants receiving Universal Credit have been going into rent arrears.
According to new research from the Residential Landlord Association’s (RLA) research exchange PEARL, almost two thirds of the private landlords they consulted have reported this issue. This research is based on responses from over 2,200 landlords.
Precisely 61% of landlords with tenants on Universal Credit have been found to be experiencing rent arrear problems, which is up from 27% in 2016. Looking at the monetary value of the arrears, the RLA has stated that these tenants owed almost £2,400. This is a 49% increase compared to the data from last year.
Landlords do have the option to apply for direct rent payments to be made to them, instead of the tenant. This is known as Alternative Payment Arrangement (APA), and has been the preferred option for some landlords. The RLA has noted that 53% of the surveyed landlords with tenants on Universal Credit applied for an APA. It took, on average, two months for successful applicants to have these payments set up, which is on top of two months of rent arrears that need to have already accrued before they can do so.
On average, the landlords who have had to wait for the two months of rent arrears to build up before being able to apply for an APA have found that the average length of time the process took was 9.3 weeks.
Overall, this is resulting in landlords being owed an average of four months’ rent, before being successfully awarded direct payment, the RLA has stated.
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.”
Landlords, remember that, if you are worried about your tenants falling into rent arrears, you can take out cover to protect your investments. Just Landlords provide Rent Guarantee Insurance, to give you peace of mind.