Welsh Universal Credit trials make good tenants turn bad!
Tenants in South Wales taking part in a trial of the UK government’s benefits reforms have seen rent arrears rise seven-fold to £140,000 in seven months.
Landlords in the pilot area of Torfaen are now warning evictions could increase if the trend continues, once Universal Credit goes live this October.
The first group of Torfaen tenants selected for the trial saw their total arrears rise from around £20,000 to nearly £140,000 in the 7 months from July to January, via Eye on Wales research.
Bron Afon Community Housing, the biggest social housing landlord in Torfaen with 8,000 properties, has 950 tenants receiving direct payment of their housing benefit.
Chief executive Duncan Forbes described the rise in arrears to almost £140,000 as “significant”, adding that a large proportion of the tenants were “never in rent arrears before“.
“That was a group of people who had a good track record of payment and pretty low level of arrears, thrust into a position where they are now is significant arrears,” said Mr Forbes.
“At the same time we’ve increased our staff levels by about double what we would normally put into income recovery.
“We’ve been very successful up to now in getting the number of evictions right down.
‘Squeezed and squeezed’
“But we can see that inevitably steadily rising.
“The difficulty for us is that if there’s no long-term solution to paying that rent we can’t sustain business as a landlord.”
Housing benefit is currently paid to the landlord but this option will be abolished under Universal Credit; primarily because ministers believe it will help tenants manage their finances better.
Since the first announcement regarding the introduction of welfare reform via Universal Credit, in October 2010, Landlord Referencing Services has been extremely skeptical and worried about the ramifications for not only landlords and tenants but also the country’s economy; if claimant tenants have no choice of direct rent payment to their property provider.
Duncan Forbes statement only confirms our deepest fears and more; not only will Universal Credit majorly increase rent arrears for both landlords and tenants but (via these trial results) will now actually turn those good tenants (who have never been in debt with their rent before) into bad tenants!
At Landlord Referencing we believe tenants should have the right to decide if their rents are paid directly to their landlord – to help those on low incomes avoid debt and arrears.
The majority of private landlords and housing associations are also extremely concerned, with many also predicting an increase in rent arrears that could damage their ability to borrow from lenders at favourable rates.
As a landlord, letting agent OR tenant if you agree that tenants should have the right to decide if their rents are paid directly to their landlord then please SIGN THIS PETITION and share it with your colleagues, peers and anyone else that might be interested.
On the other hand, if you support the abolition of direct payments of rent to landlords LRS would love you to share your views with the rest of the community as to why this is.