Executive summmary: Universal Credit and the patterns of rent balances in the Social Rented Sector - analytical report
Published 7 October 2024
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The analysis of rent balances was based on rent records provided by 8 Social Rented Sector landlords operating across 6 Regions in England and Wales. We analysed rent account histories for 15,750 of their tenants who we linked to Universal Credit (UC) administrative data. In this report “Rent balance” is defined in relation to a tenant’s rent account and includes those tenants whose rent balances are in credit as well as those in arrears.
The data was collected over early 2014 to January 2019 and so captures the early period of UC roll out and therefore predates the COVID-19 pandemic, and associated societal changes including job losses, furlough, and changes to benefit rates.
People often claim UC following a change in circumstance, such as losing a job or separating from a partner or gaining a rent liability, that can have financial impacts. Some tenants that make regular and timely payments on their rent account and are claiming UC may be considered to be in book arrears. This is due to the difference between when their rent is charged (usually weekly or 4-weekly), and when UC is paid.
Analysis overall shows that on average, tenants had arrears equivalent to 2.8 to 3.5 weeks of rent at 48 weeks before their UC claim date; this then rose to 4.4 to 5.5 weeks of rent by the claim date. Arrears then initially increased more quickly, peaking between 7.0 to 8.0 weeks of rent around 8 to 12 weeks after the claim date. They then start to decline and by 52 weeks after the claim date they were equivalent to 5.8 to 6.7 weeks.
A year into the UC claim all 3 cohorts fell to approximately 1 week of the rent balance at the UC claim date.
The proportion of tenants that pay their rent in full or overpay (to reduce arrears) declines in the 12 weeks before the UC claim date. From 12 weeks after the claim date, there is a greater proportion of over payers compared to 48 weeks before the claim date, as action is taken to reduce arrears.
The 60% of tenants that never had a Managed Payment to Landlord (MPTL) in place in UC had the lowest rent arrears almost 1 year before their UC claim which then increased and peaked at 3.9 weeks of arrears, before declining to 3.2 weeks a year after the UC claim. For the remaining 40% of tenants, arrears tended to be higher when there was a shorter period between the UC claim date and the introduction of a MPTL.
Tenants with a longer gap between being a Housing Benefit (HB) claimant and making a claim to UC tended to have higher arrears immediately prior to the UC claim; and a higher peak in arrears after they made a UC claim.
Tenants that claimed UC having not been a recipient of a DWP benefit in the two months before the claim date, had higher rent arrears on average than those that previously received a DWP benefit.
On average, tenants with earnings tended to have a similar rent balance before making a UC claim as those with no earnings. Then during their first month on UC, they tended to accrue arrears more slowly than those without earnings. Subsequently arrears declined at a similar pace for those with and without earnings.