Universal Credit leads to rent arrears

Opinion: Does social housing need a tougher approach to rent collection?

Universal Credit is to blame for 79% of rent arrears cases.

One year on from the roll-out of Universal Credit (UC) in England, new research shows that 79% of council tenants in receipt of Universal Credit (UC) are in rent arrears.

The report, published by the National Federation of ALMOs (NFA) and the Association of Retained Council Housing (ARCH) reveals that prior to claiming UC only half of those households had pre-existing rent arrears.

On Tuesday 7 June, the NFA and ARCH are due to meet with Lord Freud to share the research and discuss the indisputable link between UC and the proportion of tenants experiencing difficulties and falling into rent arrears.

The NFA and ARCH will present their concerns in a bid to persuade government to use the survey findings as a basis to review existing UC policy regarding the payment of UC monthly in arrears, and the seven day waiting period at the start of claim.

Hugh Broadbent, NFA chair, says:‘‘We look forward to sharing our findings later today with Lord Freud. The manner in which UC is currently being administered is clearly having a direct impact on the numbers of households falling into arrears – half of whom had no history of rent arrears.

“Our concerns are heightened in situations where the claimant was not in paid employment immediately prior to submitting a claim for UC, for example where previous benefits have been sanctioned or adjusted. Many claimants simply do not have adequate savings or final pay cheque to carry them through the lengthy assessment period.”

The average six week assessment period, combined with the seven day waiting time, continues to have grave consequences on tenants’ ability to maintain rent payments, and is proving to be a significant contributor to the occurrence and accumulation of rent arrears.

As increasing numbers of households face serious and prolonged financial hardship this report provides early evidence of a growing demand for money/debt advice services and foodbanks, as well as an increased presence of loan sharks within our communities.

John Bibby, chief executive ARCH, advises: ‘These survey findings continue to be extremely concerning for everyone involved in managing social housing in this country.  Despite the best efforts of ALMOs and local authorities to help prepare and support tenants claiming Universal Credit our research shows that one year on the proportion of claimants in rent arrears is still shockingly high (79%).

“A review of current policy is imperative if we are to reduce unnecessary hardship within our communities.”

Together the NFA and ARCH are calling on government to:

1.   Abandon the current seven day waiting period for UC entitlement
2.   Undertake a review of the monthly in arrears policy to ascertain if this is causing unnecessary hardship and long-term disadvantage to some claimants
3.   Speed up the UC assessment process to 3 weeks – bringing UC processing periods closer to those achieved for Housing Benefit.

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