Almost two thirds of private rented sector landlords renting to housing tenants in receipt of Universal Credit have encountered rent arrears, according to the latest research conducted by the RLA (Residential Landlords Association). With responses from more than 2,200 landlords, the RLA research exchange, PEARL, has discovered that around 61 per cent of those questioned, renting to tenants receiving Universal Credit, had seen their tenants going into rental arrears. This figure has risen by 34 per cent in 2016.
The research also discovered that Universal Credit tenants experiencing rent arrears owed, on average, around £2,400, an increase of 49 per cent since last year. More than half of landlords, 53 per cent, with tenants receiving Universal Credit requested for direct payments to be paid to themselves rather than the tenant, also known as APA (Alternative Payment Arrangement). Where successful, this process took around two months on average to be organised, in addition to the two months of arrears already accumulated. This has lead to arrears building up substantially.
The landlords who must wait for two months of rent arrears before applying for direct payments have reported that the APA process, on average, takes over 9 weeks. When added to the first two months of rent arrears accrued, landlords are owed an average of four months rent before finally being awarded direct payment.
The RLA has begun campaigning for the APA process to be urgently revised, especially prior to the start of managed migration next year, with more complex cases and families being moved onto Universal Credit. 20 per cent of landlords also claimed that their current mortgage lender blocked them from letting property to tenants receiving benefits. The Residential Landlords Association is calling for tenants to have the right to choose whether to have the housing portion of Universal Credit paid to themselves or the landlord.
They are also calling for private landlords to be provided with more information concerning their tenant’s claim, for example when they will receive payments. This will also allow tenants to confirm they can sustain the tenancy, and that a suitable rent payment schedule can be arranged. Currently, this information is given to landlords in the social housing sector, but not those within the private sector. Formal processes should be put in place to allow landlords to be reimbursed for rent arrears if a Universal Credit tenant leaves a property still owing rent.
David Smith, Policy Director at the RLA, commented that their research has clearly demonstrated that urgent changes are required to Universal Credit. Working with the Government on these issues during a constructive engagement, the RLA hopes to provide landlords with the confidence they need to be able to rent to tenants receiving Universal Credit. He explains that the impact from the autumn budget announced last year has yet to be seen, but if tenants could choose whether to have payments made directly to their landlord, it would empower them, rather than merely being told by the authorities. The research was based on RLA PEARL’s most recent quarterly survey, which questioned 2,234 landlords.
Ensure you are being transparent and fair – start using a property inspection app today to produce professional inventories, check-ins, check outs, interim inspections, building inspections, risk assessments and more with InventoryBase.
Start your free trial here today.