Universal Credit and landlords

Posted: 3rd Nov 2017

From the high cost of calls to the Department of Work and Pensions helpline, to the six-week delay until back-dated benefit payments are received, media coverage of the government’s rollout of the new system of Universal Credit has – quite reasonably – focussed on the plight of affected recipients.

Universal Credit – in a nutshell

But the new system – which combines six previously separate benefits, including housing benefit – also has a profound effect on landlords.

Universal Credit is the much-vaunted simplification of the benefits system and is designed to provide greater incentive for claimants to continue in employment, rather than rely on welfare payments. With the new Universal Credit payments made directly into individual’s bank accounts, it is argued that recipients are likely to assume greater responsibility for their finances.

Landlords’ reactions

According to a recent survey, however, landlords of buy to let property are worried about the switch from the former system of housing benefit to the new Universal Credit. Indeed, so worried are they that only one in five are prepared to continue to let their property to tenants in receipt of the new benefit, reveals research carried out by the National Landlords Association (NLA).

The fears revolve around a number of issues with the new system:

  • the six-week waiting period which any applicant for Universal Credit faces, before receiving any benefit payment, means that any tenant may be two months in arrears before the first payment of rent may be made;
  • payment of the benefit in arrears simply increases the waiting period until tenants are able to pay their rent;
  • payments in arrears also mean that may tenants are unlikely to have the deposit against damage and breakages that landlords typically require;
  • whereas it was relatively easy for tenants to arrange payment of their housing benefit directly to their landlord under the old system, Universal Credit is intended to hand greater financial responsibility back to the tenant, so that arranging payment of the housing element of their Universal Credit to the landlord is a more complicated and time-consuming process; and
  • both tenants and landlords have already encountered difficulties in communicating and interacting with the administrators of the Universal Credit system.

The result has been that two out of every three landlords are now reporting that tenants in receipt of the new Universal Credit have fallen behind in their payment of rent, according to the NLA’s survey.

All of these developments and concerns have led the NLA and other landlord groups to join members of parliament and other pressure groups to call on government to review the system of Universal Credit.