Executive summmary: Universal Credit and the patterns of rent balances in the Social Rented Sector - social research
Published 7 October 2024
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This publication reports on a project to understand of the impact of Universal Credit (UC) on the pattern of rent arrears for tenants of social landlords. It covers the experience of social landlords and their tenants and is the companion report to Universal Credit and the patterns of rent balances in the Social Rented Sector: Rent Analysis that examines the rent history of 15,750 social housing tenants who could be linked to DWP administrative records.
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 will claim UC often following a life event or change in circumstance such as losing their job or separating from a partner that can be associated with financial issues. Some tenants that make regular and timely payments on their rent account and 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 four-weekly), and when their UC is paid.
Experiences of social landlords
- Pre-claim work: encourage prospective tenants to apply for UC if eligible/appropriate and encourage to ask for an advance where appropriate. Assisting with 2 week Housing Benefit (HB) run-on if eligible, encourage payment of rent in advance, ensure housing is affordable for the tenant. However, this may not help tenants migrating with pre-existing arrears and/or have complex needs.
- Support for tenants: check housing size is appropriate (avoid under-occupation & RSRS), look to reduce utility bills, automated texts/SMSs, drop-in clinics/surgeries, employability and training programmes, help with digital literacy and access and making UC claims. Internal training for staff to boost understanding of UC.
- Housing and Arrears management: migrating to UC can be challenging when a Local Authority (LA) first went live, ‘steep learning curve’, differences here between landlords with some going for those with low-levels of arrears, some going for the higher levels. Cash flow can be a key issue but most were happy arrears would stabilise and start to fall. Using triage systems to identify which tenants need support/intervention. Main thing is communication of the significant culture change from legacy to UC with tenant having to pay their rent themselves. Variable incomes is even more of a challenge especially if on partial housing payment and/or an Alternative Payment Arrangements (APA).
- Approach to APAs: Some differences in APA usage, mostly avoiding except for cases of significantly high arrears or tenants refusing to engage with the landlord. Time it takes to put an APA in place and until recently timeliness of payment. Hard to get tenants off of APAs. Preference for tenants to be self-payer (culture change). Deductions Some very happy to use some decline
- Landlord portal – ‘portal is a godsend’ ‘Like all Christmases came at once’. Mostly all find APAS much easier and coping with UC much easier since introduction of the landlord portal. Several constructive practical/operational suggestions to further improve the effectiveness of the portal.
Experiences of tenants
- Financial stability had the greatest impact on ability to pay rent, prior to claiming Universal Credit. Previous receipt of housing benefit and financial management skills also had an impact.
- Tenants claimed Universal Credit as a result of a life event, resulting in a change in income and/or the benefits they were eligible for.
- Tenants were prompt in making their claim, however there were those who delayed making their claim due to uncertainty and a lack of knowledge. In some cases, tenants found the claim process straightforward and without delays. For others, delays arose due to issues with verification, IT issues and a lack of knowledge and / or support.
- Tenants experienced a degree of financial strain during the claim process. This was mitigated by the availability of financial support, alternative income, previous debt and the level of understanding of their claim.
- Alternative Payment Arrangements were viewed positively by Tenants, however, there were frustrations amongst those who now how to pay their rent themselves.
- Both informal and formal repayment plans were in place to help participants make repayments if they had been in rent arrears.
- Prior to making their claim, tenants recalled having a limited understanding of Universal Credit, but this improved over time.
- Landlords played an important role in the claim process as they were able to answer queries relating to their rent payments and appeared to be understanding if tenants found themselves in arrears.
- In terms of support, more information is needed, prior to making their claim, about how Universal Credit works, including who will be responsible for rent payments. Those tenants identified as vulnerable might need additional support.