Universal Credit changes fuel debt fears
Plans for the new monthly Universal Credit benefit payment may force more tenants into debt with their landlords.
These fears are expressed by Landlord Assist, the nationwide tenant referencing and tenant eviction firm which points out that the changes are due to be implemented this month.
The new scheme which aims to simplify the benefits system by combining all in-work benefits (jobseeker's allowance, tax credits, income support, employment and support allowance) into a single monthly payment rather than combination of a number of benefit payments as is currently the case.
The single Universal Credit payment will be paid directly to the claimant who is then responsible for passing on rent payments to their landlord.
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But Graham Kinnear, managing director at Landlord Assist, is concerned that the new scheme will leave landlords open to rent arrears and forced to take eviction proceedings against tenants.
He says: "While we accept the rationale that one payment is more straightforward and probably more cost effective to deliver, we are concerned that the provision of one credit will make it impossible for landlords to receive payment for rents directly, even if the tenant falls into arrears. This is because the single payment is used to cover other payments and not solely the rent.
"This concept is particularly worrying given that it could create a further disincentive for landlords to accept tenants in receipt of benefit. There is already a housing crisis, whereby demand is outstripping supply, and this scheme could make the situation a lot worse."
Stephen Parry, commercial director at Landlord Assist adds: "Additionally, we are concerned that claimants may struggle to budget for monthly rather than weekly or fortnightly payments, and this will lead to situations where many will spend housing benefit payments at the start of the month on costs other than the rent, leading to increased arrears and evictions."
Graham adds: "Many private landlords feel that the only way to boost provision of suitable accommodation for those in receipt of benefits is for the private and public sector to
work together. If local authorities can permit the payment of the rent direct to the landlord and in return the landlord provides quality, safe accommodation, then we really could turn a corner in terms of social housing provision.
"However, if the Government makes it more difficult for landlords to operate within the housing benefit market then some will leave this area of the market and fewer new entrants will want to get involved.
"The net result could be a housing crisis worse than the one we currently have."
Landlord Assist provides tenant referencing and tenant eviction services as well as a free advice service on all landlord and tenant matters. They can be contacted on 08707 662288 or via their website www.landlordassist.co.uk