Rent arrears on the rise as Universal Credit is rolled out

New research by the BBC has found that people receiving Universal Credit – the government's new benefits system – are more likely to be in rent arrears than those on the old housing benefits system.

The figures are undeniable

Data from 129 local authorities showed a startling difference between the average amount of arrears for council tenants on housing benefit compared with those on Universal Credit. On average, the former were £262.50 behind and the latter were behind by £662.56.

Designed to replace six different benefits, Universal Credit has come under fire over the amount of time it takes for new claimants to receive their money. Under the old housing benefits system, the first payment took two weeks to come through, whereas with Universal Credit it can take at least five weeks. This can leave both tenants and landlords in a difficult position.

Not just a problem for local authorities

Although this study focused on council tenancies, a similar trend can be seen in the private rental sector. Figures from the Residential Landlords Association found that 61% of their members had tenants receiving Universal Credit who went into arrears in the past year. By contrast, only 38% reported this last year.

While residential mortgage arrears remained at a record low during Q3, buy-to-let mortgage arrears are on the upswing. They have risen by 3% compared with last year, with over a thousand buy-to-let property owners in arrears by more than 10% of their mortgage value.

How to handle Universal Credit arrears

If your Universal Credit-claiming tenant is more than two months in arrears, you can use the UC47 form to apply for some of their money to be paid directly to you. This is part of the alternative payment arrangement (APA). The DWP consider it on a case by case basis and if the application is successful, then some of the tenant's benefits will be paid directly to you by bank transfer.

Aside from this, landlords have the same legal recourse that they have with regular tenants. You can try to reclaim the rent through county court, or take possession of the property using a Section 21 order.

For advice on recovering rent from problem tenants, and for more information on your legal rights, contact Dukes Bailiffs.