Sharp rise in rent arrears after introduction of universal credit, research finds

Rent arrears among council tenants have rocketed since the introduction a year ago of universal credit, social landlords have said.

Joint research by the National Federation of ALMOs (NFA) and the Association of Retained Council Housing (ARCH) has found that 79% of tenants in receipt of universal credit are in arrears, but only half of those households had arrears before the new benefit regime began.

The two organisations said there was an “indisputable link” between universal credit and the growth of arrears due in part to the policies of paying the credit monthly in arrears, and with a seven day waiting period at the start of claim.

NFA chair Hugh Broadbent said the findings would be presented to welfare minister Lord Freud with a request to review the policy’s operation.

Broadbent said: “The manner in which UC is currently being administered is clearly having a direct impact on the numbers of households falling into arrears - half of whom had no history of rent arrears.

“Our concerns are heightened in situations where the claimant was not in paid employment immediately prior to submitting a claim for UC, for example where previous benefits have been sanctioned or adjusted. Many claimants simply do not have adequate savings or final pay cheque to carry them through the lengthy assessment period.”

ARCH chief executive John Bibby described the 79% arrears rate as “shockingly high” and called for an end to the seven day period after a claim before which the benefit is paid.

The survey found that the arrears rate among tenants not in receipt of universal credit was only 31%.

Those on universal credit on average each owe £321.05, against £294.57 for all households in arrears.

Among council housing departments and ALMOs that responded, the survey found a “particularly strong consensus" that the typically six-week gap before a claimant receives their first payment caused problems with arrears.

This period comprises a one-week waiting period, four weeks because of the monthly payment in arrears policy and a further week before payment is typically received.

“All respondents to our survey agree that this is either frequently or very frequently a factor in claimants falling into arrears, and it looks likely that many claimants simply do not have sufficient savings (including their last pay cheque) to get them through this period,” the survey noted.

Mark Smulian