A new report from the work and pensions select committee highlights that people in receipt of Universal Credit are at greater risk of falling into rent arrears, which is pushing those who are already facing difficulties into further debt and leaving them reliant on food banks.
The committee has recommended the introduction of a “starter payment” which would be a non-repayable grant given to claimants when they sign on for the first time. The amount suggested would typically range from £287 for a single person aged over 25 to £416 for a couple, at an initial cost of £1bn a year for the government. This would help claimants to get by during the five-week wait, an element of Universal Credit which we at Caridon Landlord Solutions have long highlighted as one of the biggest flaws in the welfare system.
Making people wait five weeks for their first payment leaves them making choices about whether to buy food or pay rent. If they take an advanced payment, they are then expected to repay this from future Universal Credit payments which puts people on the path of debt from the beginning. It is also one of the most common reasons why landlords are reluctant to let to tenants in receipt of Universal Credit.
The ministers heard evidence from representatives of London Councils, Harrogate Borough Council, Highland Council and Cornwall Council — who all reported that local tenants on Universal Credit were more likely to fall into rent arrears than those on housing benefits.
The Committee also called on ministers to retain the £20-a-week uplift to universal credit and tax credit rates introduced as a temporary measure in April to help low-income families cope with extra Covid-19 living costs. This is currently due to end in April.
The Department for Work and Pensions (DWP) has previously rejected calls to offer grants, saying they would be open to fraud but the committee chair, Stephen Timms, said existing repayable interest-free loans offered as advanced payments are not working.
As landlords, we want to know your thoughts. Do you think “starter payments” which claimants would not be required to pay back but help prevent tenants from falling into arrears and give landlords more confidence to support this sector? Email or tweet your thoughts to us: