Since Universal Credit was introduced as part of the welfare reforms a few months ago there have been numerous reports from private landlords and housing associations claiming that their businesses and their tenants are suffering as a result. Understandably, many are concerned that their tenants will fall into rent arrears which will lead them having to claim on their rent guarantee insurance or have to cover the costs out of their own income.
Discussing the issue, chairman of the National Landlords Association (NLA) David Salusbury said: “Landlords are understandably concerned about the impact of UC, particularly as the London trials have seen deductions from Local Housing Allowance payments to cap a household’s overall benefits package. The cap effectively takes away the money intended to ensure rent is paid.
“The knock-on consequence is that landlords, particularly those who specialise in letting to tenants in receipt of housing support, could themselves face difficulties if tenants struggle to manage their monthly incomes. It is essential that landlords work with their tenants now to ensure those who are unsure about the impact of the changes are actively seeking advice on budgeting for monthly payments.”
According to the research carried out by the NLA, seventy five per cent of landlords who own over twenty properties are concerned about the impact of Universal Credit, while those with less properties are not as worried. This could be due to the fact that those with fewer properties have more control over their businesses and can keep track of all their tenants and their rent payments. For example, only thirty per cent of landlords with one property are concerned about the impact of Universal Credit, and only 43 per cent of landlords with between five and ten properties are concerned.
However, even though those with fewer properties are less concerned than those with a large number of properties, the proportion of those concerned is still notably high. This means that private landlords could start becoming more wary about offering accommodation to those that receive Local Housing Allowance (LHA) in the future, which will only exacerbate the current housing crisis. So far it seems that Universal Credit is not proving popular with a large number of those in the private rented sector, and in the future this could get worse.