The new Universal Credit payment system has had a disastrous effect on landlords in the private rental sector, says one organisation.
The Residential Landlords Association says growing numbers of landlords look set to refuse offering homes to tenants who claim benefits. The RLA conducted research which reveals that landlords are frustrated by the Universal Credit system with benefits being paid directly to claimants who then pay their bills, including their rent.
Landlords have also criticised the Department for Work and Pensions (DWP) for the way they handle enquiries and said the process for requesting that direct payments are paid direct to them takes too long.
One landlord respondent said: “The Universal Credit system is unresponsive, mysterious, and devoid of communication. I've made three applications and received one payment, but I have no idea what that payment was for.”
He told the RLA that the long delays in communication are 'unacceptable' because tenants’ arrears are mounting up and he had to pay a mortgage despite having no rental income. He said: “The Universal Credit system is a disaster and there will be an increase in homelessness.”
The RLA says that the problems with the new payment system are now so extreme growing numbers of landlords are telling them they will not rent to any claimants in future.
Another landlord told the association: “The system is shambolic and makes tenants vulnerable.”
The RLA's policy adviser, Richard Jones, said: “Universal Credit will make it harder for landlords to rent to people on low incomes. We acknowledge that the DWP has taken action to correct things but there is still a lot of work to be done and the issue is whether they can deal with the scale of the issues.”
Salford highlighted for a student property boom
Meanwhile, one property investment firm is urging buy-to-let investors to take a closer look at Salford for high yield investments. The Mistoria Group says that the University of Salford has been recognised as one of the UK's most improved universities and this will impact on student demand.
While the university is spending more than £80 million on building modern student accommodation, demand for student property in Salford will outstrip supply. Mistoria's managing director Mish Liyanage said: “After the US, the UK is, for international students, the number one destination.”
He added that the number of international students attending universities in the UK has rocketed over the last 10 years with those attending universities doubling. This surge in demand is providing landlords and property investors with an excellent opportunity since student property offers excellent returns with some properties in Salford offering an 8% rent return and 5% in capital growth to landlords.