Welfare Groups Ask for Review over Universal Credit

Latest Landlord News by: Madalena Penny

Will landlords reduce the number of tenancies offered to housing benefit claimants?


An alliance of private rented sector, property and charity bodies are to take on the DWP over direct housing benefit payment policy, due to be introduced in 2013.  Under the new proposed Universal Credit system, benefits will be grouped together and paid to recipients in one payment, including housing benefit.

With over 450,000 tenants in the UK experiencing rent arrears amounting to £224m in the private rented sector, there’s understandable concern surrounding the Universal Credit.  While 70% of housing benefit is paid direct to social landlords, a mere 12% is currently paid to their private sector counterparts.

While landlords are under some duress to reduce rents in order to receive direct housing benefit payments, DWP ministers are quick to point out that this is only on a temporary basis.  The Universal Credit is to be first introduced in May 2013 as a pilot scheme then launched in full at the beginning of October the same year.

There is a worrying concern surrounding recipients of housing benefit, who have no choice in the way payments are dispersed.  Homeless groups and housing welfare charities believe the refusal to pay landlords direct will not only lead to tenant arrears and evictions but will also convince landlords to refuse tenancies to those receiving the benefit, especially considering recent caps.  As private rented accommodation is now commanding considerably higher rental values in the last 12 months, there is little if no attraction or incentive for landlords to accept tenants in the benefit system.

On a general level, in England statistics released by the government show a 35% increase in the number of households evicted in the private rented sector and made homeless in 2010.  And this is before any caps were introduced.  Further research revealed in ‘Moves to Independent Living’, suggested rent arrears in the social sector averaged £100 per tenant, while arrears averaged £305 for private sector tenants.

The DWP are yet to give a clear picture of the structure concerning future payments.