Universal credit is not working in its existing form, with households on the benefit significantly more likely to have housing debt than those on housing benefit, according to the fourth annual Universal Credit survey from the National Federation of ALMOs and the Association of Retained Council Housing.
The Patching the net: Measuring the impact of Universal Credit on tenants and landlords, reveals that Universal Credit is draining cash and resources from already hard-pressed councils and their not-for-profit housing firms.
Two council landlords estimate that Universal Credit has added upwards of £200,000 each more to their housing management costs in the previous 12 months.
Chloe Fletcher, the NFA’s policy director, said: “We cannot stress enough how much time it takes and how much it costs NFA and ARCH members to cope with the impact of Universal Credit. Councils and their management companies have had to innovate and come up with countless work-arounds to make sure arrears don’t escalate and tenants are able to keep their homes when they move onto the new benefit system.
“This level of intense support from social landlords just isn’t sustainable as Universal Credit rolls out and the government starts to move existing benefit claimants onto UC. Council housing budgets are already under enough pressure from the cuts in rental income imposed upon them by government for the past four years.
“We are calling for government to both improve the way it administers UC and to fund social housing organisations to provide the support tenants need during the transition to UC.”
Significant changes are being made to the Universal Credit system that will see the housing element of the benefit paid directly to landlords at the start of a claim.
Currently, both social and private tenants who claim the controversial benefit are responsible for making rent payments to their landlord themselves.
However, research shows that many tenants would prefer to have the assurance that their rent is paid direct to the landlord and now it would appear that their right to do this will finally be introduced as part of a new Universal Credit system.
Given around a third of Universal Credit claimants are private renters that means around 2 million people could have their rent paid directly to landlords moving forward.
The new scheme could also make it easier for other renters on Universal Credit to find private landlords who will accept them.
Sherrelle Collman, managing director of Caridon Landlord Solutions, said: “Caridon believes that the paper forms are taking weeks to be processed, sometimes getting lost along the way and all the while rent arrears are mounting up.
“We have been working with DWP to develop an agile online system, making suggestions for adjustments to ensure it is as user friendly and efficient as possible - not only to get payments made directly to landlords where necessary, but also to speed up the process.”