Universal Credit in a time of crisis

Our report sets out findings from the National Housing Federation’s (NHF) income collection tracking survey of 23 housing associations in England before and during the coronavirus pandemic and interviews with 10 of those surveyed, alongside national statistics. The organisations surveyed represent 10% of all housing associations homes across England.

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%. Given the increasing number of people claiming Universal Credit, we wanted to find out whether coronavirus had affected tenants’ ability to pay their rent, and any differences for people on Universal Credit.

Our headline findings

• Housing associations have worked hard to support tenants during the coronavirus pandemic. This includes helping tenants financially affected to claim benefits, supportive approaches to rent collection, hardship funds, check-in calls, and shopping for customers.
• Our survey data shows that the number of housing association tenants claiming Universal Credit increased by 83% from June 2019 to September 2020.
• While the picture around arrears is complicated, 60% of households claiming Universal Credit are in arrears, compared to 36% of households paying by other means.
• Households claiming Universal credit are also likely to have higher arrears: an average of £610 compared to £301 for people paying by other means, from April to September 2020.
• Average arrears of £610 represents 48% more than the standard monthly Universal Credit payment for a single person with no children in England (£411.51 until September 2021).
• Households claiming Universal Credit could owe over six weeks of rent based on 2019/20 average general need social rent for England (the lowest cost rent for social housing).
• In the worst-case scenario, if this pattern continues, rent arrears could potentially rise by an additional £330m when all working age Housing Benefit claimants move to Universal Credit. Average debt per household could nearly quadruple (from £113 to £420).
• This higher debt harms tenants and reduces available income for housing associations to support tenants and deliver safe and sustainable homes.

Our main recommendations

• Housing associations want to work with the government to better understand drivers for rent arrears, including more strategic involvement on the co-design and improvement of Universal Credit systems.
• The relationship between Universal Credit and rent arrears is complicated. The Department for Work and Pensions (DWP) and the Ministry of Housing, Communities and Local Government (MHCLG) need to conduct more research on Universal Credit and rent arrears, including publishing existing DWP research with housing associations in full.
• The government should make permanent the £20 per week uplift to help prevent rent debt and ensure people can afford what they need.
• The DWP should conduct an urgent review of the Universal Credit five-week wait and deduction system to ensure people can meet their own needs and any creditor obligations in a fair and sustainable way. This might include reducing the cap for deductions, not introducing deductions until the claimant is in receipt of full monthly awards (i.e. not during a period where they are still paying for advances), and changing advances to a loan to be paid back once the claimant returns to work.
  • A further measure could include a one-off payment, paid directly to landlords, to cover rent over the wait for first payment.