Rent Arrears

Rent arrears ‘are lower under direct payments to landlords’

With new research showing that direct payment of benefits to landlords contributed most to reductions in rent arrears, the Residential Landlords Association (RLA) is calling for greater support for its position that tenants in receipt of Universal Credit should have the right to choose whether the housing element is paid directly to their landlord.

Private landlords renting to Universal Credit claimants can apply to have the housing element paid directly to themselves when a tenant has reached two months of rent arrears. This is known as an Alternative Payment Arrangement (APA).

Southwark Council was one of the first areas of the country to see Universal Credit full service roll out. Its rolling reports on the impact of this on housing have found that there is a noticeable decrease in the levels of arrears for those claiming Universal Credit in 2018 compared with those transitioning to Universal Credit in 2016.

The Smith Institute report commissioned by Southwark Council states that “it is the earlier and increased use of APAs, rather than other reforms, which have contributed most to reductions in arrears levels observed”.

On average, each person in the 2016 group was six weeks in arrears at the end of the period compared with just under two weeks for the 2018 group. The report adds: “Originally designed to apply to a handful of cases, more than 40% of Southwark tenants claiming Universal Credit have now entered into APAs with the council to help manage their finances”.

Landlords may apply for an Alternative Payment Arrangement but only after two months of rent arrears have built up. More than half the people claiming Universal Credit are in rent arrears, according to the Residential Landlords Association (RLA).

It reports that 54% of those private landlords who have let to tenants on Universal Credit in the past 12 months have seen them fall into rent arrears. Of these, 82% said that the arrears only began after a new claim for Universal Credit or after a tenant had been moved to it from housing benefit. Some 68% of landlords said that there was a shortfall between the cost of rent and the amount paid in Universal Credit. David Smith, policy director for the RLA, said: “Our own research finds that over half of landlords with tenants on Universal Credit have seen them fall into rent arrears in the last year.

“The report demonstrates that arrears are lower under direct payments to landlords and supports our call for the government to give all tenants on Universal Credit the ability to choose to have the housing element paid directly to their landlord.

“Many tenants feel more comfortable with managing their finances knowing that their rent is paid and it should be up to them to be free to make that decision.”


 

SUBSCRIBE

* indicates required