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Universal Credit in the news again for all the wrong reasons

Thursday 16 November 2017

Universal Credit is in the news again for all the wrong reasons. We've lobbied the Government over our concerns about this recently introduced benefit, but real-life examples of tenant hardship were brought to the fore in a heated debate in the House of Commons yesterday.

In Prime Minister's Questions on 15 November, Labour Leader Jeremy Corbyn illustrated just how bad the current situation is for some tenants claiming Universal Credit.

Corbyn produced letters from a letting agent that had been sent out to all of its tenants in receipt of Universal Credit saying that because of changes to the way benefits are paid following the introduction of UC, it could take up to six weeks to receive any money. The letting agent explained how this would impact their business and that it wouldn't be sustainable, which is why he had no choice but to issue section 21 notices to his tenants. 

The exchange in the House of Commons, brought to light issues that we have previously raised with the government. 

The ins and out of the debate at PMQs is well covered by others, including the Huffington Post, but suffice to say that the heated exchange in the Commons puts, even more, pressure on the government to take immediate action and reconsider their approach to how benefits are paid and the processing of claims.  

ARLA Propertymark has lobbied government on this issue and we attend regular meetings with the DWP Universal Credit Private Rented Sector Strategic Landlord Group, raising our concerns over direct payments not being processed quickly enough which is causing many landlords to reconsider whether they rent properties to those in receipt of the benefit. And it's an argument we have evidence to back up, with 34% of ARLA Propertymark letting agents saying they had seen a reduction in landlords renting to Universal Credit claimants*. 

We have ensured through the Working Group that there is an agent section during the application process to try and help/urge the claimant to contact their landlord or agent.

One landlord on the DWP private sector group said he was owed £22,000 because of Universal Credit arrears, which illustrates how landlords are stuck between a rock and a hard place over Universal Credit. Most landlords want to do the right thing by their tenants, but it's inevitable that some won't be able to afford a period of non-payment by several tenants. In such situations, they may have no choice but to issue S21 notices, and this is why the government needs to tackle this issue with real urgency. 

Labour politicians have said that they'd like to see the waiting times reduced to two weeks, and we agree that this should result in a considerable reduction in the problems the sector is currently experiencing with Universal Credit. 

As well as reducing the time it takes to process payments, ARLA Propertymark members have also told us that the option to have the benefit paid directly to landlords would help the current situation. 

In addition, the Government should look at how the Scottish Government have introduced new choices for claimants; they can choose to either have the benefit paid monthly or twice monthly. However, it's important to note that although the Scottish system makes it easier for claimants to budget on an ongoing basis according to their needs, it does not mitigate the fact that the initial waiting period is still long, as claimants can only make their choice after they have received their first payment.  

Whilst cases such as those highlighted by Corbyn are alarming, it's important that claimants in the PRS keep in regular contact with their landlords or letting agents and let them know of any changes to their circumstances or if they are moving from any of the six benefits over to Universal Credit. It may be that alternative arrangements can be made. 

The majority of letting agents do an important job ensuring that tenancies are safe and legally compliant. The decline in council housing means that the private rented sector is left to house the nation. However, the ban on tenant fees and restriction in tax relief for landlords means that the sector will soon be functioning with both hands tied behind its back so it’s inevitable that vulnerable tenants will suffer.

More and more people are renting and not enough houses are being built. The Government should be doing more to support those who are providing a good service to tenants whilst urgently reflecting on the impact of recent legislation, including Universal Credit, or we will begin to see an even bigger divide within the ‘two-tier’ private rented sector. 

For help understanding Universal Credit, download our Fact Sheet, available exclusively to members.