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Landlords can't take risk on Universal Credit tenants

Wednesday 29 March 2017

Universal Credit is deterring landlords from renting to tenants on the new Government benefits, the chair of the Residential Landlords Association (RLA) has warned. 

Research by the RLA last year found that 25 per cent of landlords with tenants on Universal Credit said that they had tenants in rent arrears, while a recent survey suggests that 68 per cent of private sector landlords are now less likely to rent to tenants on benefits.

RLA chairman Alan Wall said: "The result of landlords not having confidence that they will receive the rent is that fewer will be willing to rent property to those in receipt of benefits. 

"They can’t afford to take the risk of being out of pocket."

He says problems have been sparked because the opportunity to make direct payment to the landlord has been reduced and the benefit is paid monthly in arrears, with first payments not received until six weeks after the claim has first been registered.

Mr Wall said: "Ministers argue that insisting that Universal Credit is paid directly to the tenant promotes financial responsibility, but for some tenants who are fearful of going into rent arrears, the responsible thing to do would be to opt to have payments made directly to the landlord.

"It is time to trust claimants to know what is best for them, and give tenants in receipt of Universal Credit the opportunity to choose, where they feel it is best, to have the housing element paid directly to their landlord."

Mr Wall argues that ‘Trusted Partner Status’, which enables social landlords to access when and how much tenants in receipt of Universal Credit are paid - and quickly ensure payments are made directly to the landlord if arrears start to mount - should be available to landlords in the private sector.

Universal Credit was introduced by the former work and pensions secretary Iain Duncan Smith in 2013 to make sure claimants would be better off in work than on benefits. 

Landlords and poverty campaigners have urged ministers to address some of the more negative effects of Universal Credit, with some backing proposals being considered by the Scottish government, such as fortnightly payments and allowing claimants to have their rent paid directly to landlords.

A spokesperson for the DWP said: "Our research shows that the majority of UC claimants are comfortable managing their budgets, and after four months the proportion of surveyed UC claimants who were in arrears fell by a third."

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