Universal credit will lead to an average increase in rent arrears of £180 for each tenant, according to law firm Winckworth Sherwood.
A major shake-up of the benefits system began yesterday with a pilot involving new claimants in Ashton-under-Lyne in Greater Manchester. Universal credit will merge several benefits and tax credits, including housing benefit, into one monthly payment.
But analysis of a separate universal credit pilot by Winckworth Sherwood found that the move to one monthly payment will see a significant increase in rent arrears as tenants in social housing struggle to adjust.
The firm found that a pilot involving around 2,000 tenants in the London borough of Southwark earlier this year showed tenants who started the pilot with no rent arrears found themselves on average £180 in debt at the end of the pilot.
The pilot involved 1,500 local authority tenants and 500 tenants of Family Mosaic housing association. It found only 60 per cent of tenants successfully moved onto the pilot, with 40 per cent failing to successfully manage their monthly budgets. Of those involved, 11 per cent refused or were unable to engage with the local authority and 14 per cent were later deemed too vulnerable to take part.
Nikki Lynds-Xavier, a partner in Winckworth Sherwood’s housing management team, said that these findings were ‘worrying for housing associations’.
‘Further small-scale pilots have shown that under the new benefits system, housing officers have to make upwards of 40 visits in each case when chasing rent arrears, compared against six under the current system. This adds an enormous administrative burden and cost for those providing social housing,’ she added.