Inquiry into Universal Credit follows landlords' criticism
The National Audit Office is launching an inquiry into the effectiveness of Universal Credit after a leading landlord body criticised the system.
The probe will assess whether the Department of Work and Pensions (DWP) is on course to deliver Universal Credit, in accordance with its plans.
It will also determine whether there are early signs that Universal Credit is delivering its objectives, and what impact it is having both on claimants and on local stakeholders.
The Residential Landlords Association (RLA) has criticised the controversial system, which ‘bundles’ individual benefits into a single monthly payment, as it makes it tougher for landlords to rent to people who are on low incomes, because they lack the confidence that they will receive the rent.
Richard Jones, the Residential Landlords Association's (RLA) policy director, said: "We strongly believe that the Government's whole approach is flawed and although the objective of helping tenants manage their financial affairs is in isolation a laudable one, the Government has wholly failed to appreciate the consequences of this."
When Universal Credit was initially unveiled, the Residential Landlords Association (RLA) predicted the changes would be "a much higher level of arrears, an unwillingness of landlords to house benefit claimants, increased unwillingness by banks to lend for this kind of property, much higher levels of evictions and much greater homelessness."
Sue Sims, a Birmingham based landlord, thinks she’ll have to stop renting to tenants on benefits because the numbers simply won’t add up anymore. At a Simple Landlords Insurance event, landlords discussed the challenges ahead. Sue explained: “It’s already been proved that the arrears rates in the areas which have Universal Credit have gone up hugely. You need the security that you’re going to get your rent paid on time, otherwise you can’t pay your mortgage. As a result, I won’t even consider housing benefit tenants in my properties any longer.”
Indeed, recent research published by Residential Landlords Association (RLA) research lab PEARL shows that out of 2,974 landlords, 38 per cent reported that they have experienced Universal Credit tenants going into rent arrears in the past twelve months and were owed an average £1,600 in rent arrears. Sue is not alone in her reluctance to rent to tenants reliable on Universal Credit - another survey of more than 1,000 landlords in found that 91.6 per cent of landlords said the introduction of Universal Credit would make them less likely to rent to those on benefits.
Alex Huntley, Head of Operations at Simple Landlords Insurance, added: “In many areas, social housing is propped up by the private rental sector - and landlords changing their strategy/tenant-type, could leave a significant gap. What’s more, it’s a gap that’s going to affect some of the most vulnerable people in society. The landlords we talk to want to be able to support tenants on benefits, but simply can’t see how they can continue to do so while continuing to turn a profit.”
Universal Credit has also received criticism from Citizens Advice, who called for the roll-out to be halted until until ‘significant problems’ with it are fixed. Meanwhile, RLA directors David Smith and Chris Town met with Caroline Dinenage MP, the new Minister responsible for housing cost support at the Department for Work and Pensions, to discuss issues including rent arrears and direct payments, during which she promised to investigate the association’s concerns.
The National Audit Office inquiry follows the announcement last month of a new helpline was announced to help landlords with tenants claiming Universal Credit falling into arrears.
Alex added: “It’s great to see that all of these concerns have now resulted in the National Audit Office inquiry. Hopefully it’s a chance to address some of the issues landlords have identified. I look forward to seeing the results of their findings.”