And they’re right to be fearful. Universal credit trials up and down the country have seen arrears soar seven fold in some areas. The trial in South Wales seen rent arrears in just seven months go from £20,000 to £140,000.
Private sector landlords whose tenants are on local housing allowances have been used to this system, but social sector landlords who have had the rent paid directly to them, will need to adapt as with the introduction of the Universal Credits this will stop.
There are warnings that this new system will be taking away rent due to landlords as some people will not be able to manage their finances with one single monthly payment and there are fears of a high increase in the number of evictions. The knock-on effect is that more and more private landlords will not be getting involved with people on housing benefits.
The Residential Landlord’s Association has released a briefing note on the Universal Credit movement which includes repercussions and concerns for landlords, which can be found here: http://www.rla.org.uk/docs/ucp_briefing_note_1206.pdf
The government still maintains that the credits scheme will allow people to control their finances better and will improve their self-esteem, although they have put new steps in place to limit the potential negative impact of the reform.
Details released by the government last week explain that under its universal credit reform landlords will be able to contact the Department for Work and Pensions to request benefits designed to cover housing costs are paid to them once a prescribed level of rent arrears is reached. At this point the department will also start to recover the arrears by docking universal credit payments.
The Communities and Local Government department says the government is committed to the move to direct payment of housing benefit, but it also want to ensure universal credit is introduced;
"In a way that protects the finances of social landlords"
The government is running six pilot projects to assess the impact of direct payment of housing benefit, and recently announced these will be extended from a year to 18 months to allow it to look more closely at the protection that is needed for landlords and tenants.
This includes calculating what level of arrears should trigger a switch in benefit payments from tenants to the landlord. The first full universal credit pathfinder, which launched in Greater Manchester at the end of April, is using two months of arrears as the trigger point, however a final decision on the threshold to be used for the national roll out will be made after the direct payment pilots have been evaluated.
For more information about how Universal credit will work please visit