A big rise in the non-payment of rent in those areas where universal
credit has been introduced has been predicted.
The National Landlords’ Association (NLA) says that universal credit will
lead to a decrease in landlords who are will rent out their homes to
benefit claimants.
They say that the new scheme will encourage a tenant to fall into arrears.
From a survey they undertook, the association says between 18% and 20% of
private landlords will accept a tenant paying rent with local housing
allowance (LHA) or its replacement, universal credit.
In 2010, the number of private landlords saying they would accept benefit
claimants was 46%.
Landlords with local housing allowance tenants
Their figures also reveal that 60% of landlords with local housing
allowance tenants, and 63% of landlords with tenants on other benefits, saw
rent arrears over the last year.
The average arrears under LHA is £2,263, which compares with £1,774 for all
tenancy types.
The NLA’s chairman, Richard Lambert, said the claimants are falling into
arrears as the allowance doesn’t cover housing costs.
He added that while benefits have been frozen, rents have increased by 2%
to 3% annually and many tenants are now struggling to make up the
difference if they are not in work with their other benefits.
‘We are expecting a steady decline in landlords’
Mr Lambert said: “This problem with universal credit will be exacerbated
with all benefits rolled together in one payment. We are expecting a
decline in landlords renting to benefit claimants over 18 months to two
years.”
The NLA says that in those areas where universal credit has been
introduced, the landlords are reporting a big increase in non-payment of
rent.
Also, around one in three landlords have to take possession of at least one
property from tenants on LHA, which compares with 15% generally.
Millennials cannot afford to rent a home
Meanwhile, it’s been revealed that 700,000 millennials in the UK cannot
afford to rent a home.
The findings from Noddle, a credit report provider, reveals that rising
deposits and rents are making it difficult for young people to leave their
parents’ home.
In addition, landlords are filtering out potential tenants who have a poor
credit score.
Their research reveals that the average rental deposit in the UK is £970,
while the average monthly rent is £927. In London, the average rent is
£1,593 while the deposit is £1,831.
Noddle’s managing director, Jacqueline Dewey, said: “Our research
suggests that it’s not just buying a property that is increasingly
difficult for young people but renting is also, for many, out of reach
too.”
