More than half of Universal Credit claimants are in rent arrears

According to the Residential Landlord’s Association (RLA), over half the people claiming Universal Credit are in rent arrears. This staggering statistic is almost certainly going to be grounds for many landlords to overlook tenants claiming housing benefits, but it needn’t be this way. 

A report by the RLA suggest 54% of private landlords renting to tenants claiming Universal Credit in the past 12 months have seen them fall into arrears. Of these landlords, 82% confirmed the arrears only commenced amassing after a new claim for Universal Credits had been filed, or after a tenant had moved across to the scheme from standard housing benefits.

Some 68% of landlords said that there was a shortfall between the cost of rent and the amount paid in Universal Credit.

Landlords renting to those claiming Universal Credits have the option to apply for the housing element to be paid directly to themselves; in the event a tenant reaches two months of rent arrears through the scheme. This is known as the Alternative Payment Arrangement (APA).

Despite this, there are records of cases taking an additional 8 weeks to be followed up. The result is that landlords are being left in four months of rent arrears before a single trace of the rent they are owed lands in their account.

With these facts in mind, it is all too visible that there are a considerable amount of landlords put off letting their investments to Universal Credit claimants. That is if they are even able to do so, as there are a wealth of buy-to-let mortgages that prohibit landlords from letting to tenants sourcing the rent through benefits.

There are challenges for all parties involved when it comes to Universal Credits. Claimant tenants are faced with the challenge of ensuring affordability of the rent so as not to fall in rent arrears. Landlords are faced with the challenge of ensuring their rental income is maintained, or the challenge of pursuing the rent through the scheme in the outcome of rent arrears. The Government still face the challenge of ensuring Universal Credits work for both tenants and landlords.

Of course there is the notion that landlords will soon be able to be paid directly through the Universal Credits, but until then what are the options?

The ultimate aim of course is to minimise potential void periods whilst securing the best tenant for your investment. This requires an immense attention to detail, a broad selection of tenants to choose from in the first place, and thorough checks to ensure you pick the best one; sustaining a long and happy tenancy within your property.

Abode take great care and ensure every precise detail is met to ensure the right tenant for your investment, as a claimant or not. For more information, give us a call on 0161 883 2525.


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