86% of UC claimants in rent arrears

Two and a half years on from its implementation, problems experienced by Universal Credit (UC) claimants have not subsided, but have in fact dramatically worsened.

Research published by NFA and ARCH has found 86% of universal credit claimants living in council homes are in rent arrears.

This latest data is correct as of 30th September 2016 and sees a rise of 7% from March 2016, when it was at 79%.

This is compared to the percentage of tenants who are in arrears overall at 39%.

The research also found 59% of universal credit claimants living in council owned homes have arrears that equate to more than one months rent.

The average value of arrears tenants owed across UC households has almost doubled to £615 since 31 March 2016 when average amount was £321.

This against contrasts to the national arrears figures which, in the same period, has decreased from £294.57 to £250.15.

Although 63% of UC tenants in arrears had pre-existing arrears before their UC claim only 44% of them are on APAs (alternative payment arrangements with direct payment from DWP)

Chloe Fletcher, NFA Policy Director, explained the APAs policy: “If the claimant was already in arrears, the landlord could say it doesn’t make sense to get them into more arrears, so we will apply for this money until those arrears are cleared.

“During that time, we can support that tenant to get them up to speed on monthly budgeting, getting on with any other financial issues they may have and then we can get them onto managing their own UC.”

John Bibby, Chief Executive ARCH, said on the research findings: We are extremely concerned with the upward trajectory of rent arrears for universal credit households.

“If this trend is not reversed it will have significant impact on local authorities’ rental income streams and the long term ability for housing departments to provide essential services to their communities.”

In ongoing talks with Caroline Nokes MP (responsible for overseeing the implementation of Universal Credit) the National Federation of ALMOs (NFA), the Association for Retained Council Housing (ARCH) continue to lobby for an end to the seven day waiting period for Universal Credit claims.

In an exclusive comment piece for 24housing about the research, NFA Policy Director, Chloe Fletcher, said the seven day waiting period is “unnecessary pressure on families.”

She said: “Maybe DWP could do it as a means-tested thing but they have to realise that some people are in a tight spot financially before they go onto Universal Credit and this is supposed to be the safety net that is helping them, not making those financial difficulties worse.”

Since its introduction in April 2013 the NFA and ARCH have been monitoring the impact of UC on levels of rent arrears of households living in council owned homes.

Hugh Broadbent, NFA Chair, said: “We believe the current unacceptable waiting times and errors in processing claims are causing significant financial hardship to our tenants and communities. The reported increase in the presence of loan sharks within our communities is alarming, but sadly not surprising.

“The delay in claimants receiving benefit inevitably forces households to turn to other ways to survive, including family and friends, pay day lenders and as a last resort loan sharks.

“The repayment of extortionate interest only further exacerbates a tenant’s ability to pay their rent.”

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