Universal Credit in a time of crisis

Since the start of the coronavirus crisis, the number of social rented households in England claiming the housing element of Universal Credit has increased by 39%. This represents over a quarter of all social renters.

Given the increasing number of people claiming, myself and colleagues in the National Housing Federation’s (NHF) Research team conducted monthly tracking surveys of housing associations (and follow up interviews) to find out whether coronavirus had affected people’s ability to pay their rent and any differences for people on Universal Credit.

Here’s what we found.

Total rent owed is rising for some, but not all, housing associations

For our research, 23 housing associations provided over six months of data in response to the survey. From the results, we found 71% housing associations (out of 21 we have data for) saw total money owed (rent arrears) for Universal Credit households rise during the pandemic, with 53% of these also seeing a rise in total arrears for people paying by other means. Of these 21 organisations, 14% saw a fall in total arrears for both payments types.

Households claiming Universal Credit are more likely to be in arrears and to have higher average arrears

Our survey found that Universal Credit households were more likely to be in arrears, with 60% of households in arrears, and to have higher average arrears, than people paying by other means (self-payers and people on legacy benefits). The average arrears for a Universal Credit general needs tenancy in arrears was £610 (compared to £301 for people paying by other means). These arrears represents 48% more than the standard monthly Universal Credit allowance for a single person over 25 with no children in England. This could be over six weeks’ rent, based on the average general needs social rent for England.

Challenging times have led to more support for tenants

Through interviews, we heard about inspiring, hard work by housing association teams to support tenants during the coronavirus pandemic, which included:

• Dealing with a surge in Universal Credit claims.
• Advising tenants on the most appropriate benefit and how to claim.
• Check-in phone calls for older or vulnerable customers.
• Food shopping or vouchers.
• Regular phone calls to prevent loneliness among people living by themselves.

Of the 10 organisation that we interviewed, 60% started a hardship fund for tenants, with a further 20% using funds that existed pre-pandemic.

Housing associations committed to not evict anyone as a result of financial hardship caused by coronavirus, where they are working (or engaging) with their housing association to get their payments back on track. During interviews, housing associations who previously used enforcement through the legal process to engage tenants on arrears had increased their focus on upfront offers of support for people struggling financially or not keeping up with rent. They expected to continue focussing on offers of support, rather than enforcement, when collecting rent in the future.

If we do not act now, rent arrears will continue to increase

A crisis in housing affordability and welfare reform, alongside the increase in claimants due to the economic consequences of the health crisis, is creating a looming rent debt emergency.

According to the English Housing Survey, 80% of social renters have no savings. Yet there is a five-week wait for the first payment of Universal Credit following a claim, and advances to cover this period reduce the standard allowance over the following 24 months. With a fifth of social renters subject to the Under Occupancy Charge ('Bedroom Tax'), and 3% of all households claiming Universal Credit affected by the benefit cap, money is tight for tenants claiming support.

When over one million working age individuals in social housing move from Housing Benefit to Universal Credit, more tenants may struggle with arrears and rent debt per household could almost quadruple. This would mean the sector carrying an additional £330m rent arrears from people moving to Universal Credit.

There is no certainty around this. Our research findings show that the picture around rent arrears is complicated. We need more research to understand what is driving higher average arrears for Universal Credit claimants and act to prevent debt.

The NHF, working alongside our members, want to work with the Department for Work and Pensions to conduct more research to understand drivers for rent arrears, provide better advice to people claiming housing element of Universal Credit and improve the claimant experience.

It’s critical that at times of crises we go even further to support our residents. By working together, we can work to understand and prevent Universal Credit arrears, which will in turn prevent financial hardship for thousands of people across the country.

You can read the full report on our website or if you want to find out more about our research, please do get in touch using my contact details below.