Universal Credit cut will worsen rent arrears crisis

7th October 2021

The Universal Credit cut will worsen rent arrears crisis according to the National Residential Landlords Association (NRLA)

The NRLA says that with the  Government pressing ahead with a planned cut to Universal Credit of £20 per week, the level of welfare support which had been increased in light of the impact of the pandemic on household incomes will impact rent arrears.

With rent arrears at historically high levels, the NRLA’s view is that this cut will significantly worsen the levels of rent debt accrued by tenants across the private rented sector. According to official government figures, almost 1.5 million renters across England and Wales could also stand to lose £1,000 as a direct result of today’s announcement.

According to the 2019/20 English Housing Survey, 14.4% of privately rented households in receipt of benefits were behind on rental payments. Over the course of the pandemic, the overall proportion of privately renting households in arrears tripled. Many more households will be forced into a perilous financial position due to the impact of the end of the furlough scheme and today’s cut.

The NRLA says that without urgent reform of the Universal Credit system there is also a strong likelihood that tenants’ credit scores will be damaged – an outcome which will reduce their ability to access other housing in future.

Practical steps to combat the negative effects of this cut, such as ending the five-week wait for a first payment of Universal Credit, must also be prioritised by the Government to bolster landlord confidence in the welfare system.

Meera Chindooroy, Deputy Policy Director at the National Residential Landlords Association, said “During the pandemic we have found that many renters have built high levels of arrears, which they will struggle to pay off in future. With this in mind, today’s cut to Universal Credit is a short-sighted move that will only serve to worsen this ongoing rent debt crisis.”

“Most landlords have offered flexibility where tenants have faced the financial impact of the pandemic, but they cannot absorb these losses indefinitely.”

“Practical steps to address this problem can and should be taken to ensure those tenants in receipt of benefits can cover their rents. It is our view that not only must the Government end the five-week wait for the first payment of Universal Credit, it should also ensure they can choose to have the housing element of their Universal Credit payments sent directly to their landlord.”

“Besides addressing the consequences of this cut to Universal Credit, it is our belief that adopting this new approach will go a long way towards the creation of a fairer, more inclusive private rented sector which works in the interests of both landlords and tenants.”