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Housing association rent arrears could rise by £330m after Universal Credit switchover, NHF warns
Rent arrears among housing association tenants in England could rise by £330m after the switchover from legacy benefits to Universal Credit is complete, the National Housing Federation (NHF) has warned.
A survey of housing associations by the trade body found that the number of tenants claiming Universal Credit for help with their rent costs increased by 83% between June 2019 and September 2020 amid the coronavirus pandemic.
The increase means households claiming Universal Credit accounted for 28% of all occupied general needs homes owned by housing associations as of September last year.
Of these, 60% had fallen behind on rent compared with 36% paying by other means including housing benefit, the NHF’s research found.
And the average amount owed by Universal Credit households in rent arrears was £609.92 between April and September, more than double the £301.29 among those lagging behind who pay by other means.
That figure for Universal Credit households in debt equates to more than six weeks’ rent for the average general needs social housing tenancy.
In a report presenting the research, the NHF said the findings suggest that if all working-age social housing tenants on housing benefit moved to Universal Credit then rent arrears on housing associations’ books could rise by up to £330m.
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According to official statistics, there were 1,258,908 social rented sector households across Britain receiving the housing costs element of Universal Credit as of November 2020 and 2,245,598 housing benefit claimants living in social housing.
The government wants to move all of these housing benefit claimants – including more than a million working-age housing association tenants – over to Universal Credit in a process known as managed migration.
Managed migration has been delayed several times, with ministers recently deciding to push back the start date until April 2022.
The process is now hoped to complete by September 2026 – nine years later than originally planned.
In its report, the NHF called for the Department for Work and Pensions (DWP) to work with housing associations to “understand and prevent any arrears linked to Universal Credit”.
It urged the department to publish research on rent arrears among social housing tenants claiming Universal Credit and to carry out further studies alongside the Ministry of Housing, Communities and Local Government.
Research by housing groups has consistently identified high arrears among tenants on Universal Credit.
But the NHF report said its survey found that the “picture around rent arrears and Universal Credit is very complicated, with differences between individual housing associations”.
“We need more data from government on what is driving higher average arrears so we can fix any issues and stop benefit claimants from developing debt,” it added.
The body also repeated calls for the £20-a-week boost to the Universal Credit standard allowance introduced during the COVID-19 crisis to be made permanent, as well as for a review of the five-week wait for new claimants to receive their first payment.
The £20 uplift is due to be scrapped at the end of September, in a move the Joseph Rowntree Foundation has warned could plunge hundreds of thousands into poverty.
A DWP spokesperson said: “Any rise in rent arrears can’t be attributed solely to Universal Credit. Many households claim Universal Credit following a financial shock, such as losing a job, and they may already be in financial difficulty at the point they make their claim.
“Urgent advances are available should anyone be in significant financial distress, and we have recently implemented new rules that allow claimants taking an advance to spread 25 benefit payments across 24 months, double the previous limit.”
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