Despite warnings from councils, charities and backbenchers, the Government is forging ahead with the Universal Credit scheme.
Widely feared a social policy disaster, it changes the way people receive benefits. Six benefits now become one in the boroughs where it’s been adopted.
A sound idea in principle: the idea is to simplify the system and encourage more people into work. So why the outcry?
In all local authorities using the universal credit system, more and more tenants are falling one and two months into arrears with their rent.
Council leaders fear rough sleeping and homelessness could double this winter as social housing tenants slip into arrears and eviction.
People on benefits budget week to week but universal credit is paid monthly. When starting out on the system, people may have to wait up to 8 weeks to get paid.
What does this mean for the private rental sector?
Private landlords renting to tenants on housing benefits usually receive payments direct into their bank accounts.
Universal credit changes that. Instead, benefit claimants receive their payments into their own bank account and become responsible for paying their own rent.
Private landlords may turn potential tenants away unless benefits under the new universal credit system are paid directly to them. It’s understandable. No landlord wants to evict tenants and force them into homelessness. But financial pressure from rental arrears would cause them to evict if rent can’t be paid on time. Many landlords’ properties have mortgages which need to be paid.
Landlords need confidence rent will be paid or be unwilling to rent to tenants receiving benefits.
Be aware that your current tenants’ circumstances may change. Through illness or lower income, they may, during their tenancy with you, need to apply for housing benefit or universal credit for the first time. If so, they’ll go through the long process of applying online for the benefit and waiting for their first payment.
Before deciding whether to let to universal credit tenants, speak to your mortgage provider and check the conditions of the loan. Some lenders do not allow landlords to let to tenants on housing benefit.
Check your insurance cover adequately protects your property investment and income.
Stay in touch with us for updates as the universal credit scheme progresses.
