Universal Credit blamed for 47% increase in demand for rent arrears advice

Demand for advice regarding rent arrears in Scotland has increased by 47% over the last five years, new evidence has revealed.

A report published today by Citizens Advice Scotland (CAS), which considers the causes and consequences of this rise, finds that changes to the social security system have been one of the key drivers of the problem, in particular Universal Credit.

The report notes that the increase covers the period in which Universal Credit has been rolled out, and presents a number of case examples which illustrate the typical links between the two.

Citizens Advice Scotland’s findings include:

  • The considerable growth in rent arrears as an area of advice has coincided closely with changes to the social security system, particularly the advent of welfare reform.
  • Almost one-quarter of those living in rented accommodation have experienced rent arrears in the past five years.
  • CAB clients with rent arrears are more likely to be in part-time employment, unemployed, be a single person or lone parent, be aged 25-44 and live in 20% most deprived areas.
  • The most common reasons for rent arrears are
    • a benefits-related issue,
    • loss of income, or
    • unexpected costs.
  • The most common ways of getting out of rent arrears are borrowing money from elsewhere (such as from friends and family, or on a credit card) or cutting back on essentials. Neither of these are particularly sustainable solutions.
  • During the past eighteen months, CAB clients’ rent arrears issues have predominantly been caused by them moving onto Universal Credit, and experiencing problems with the delivery of support to pay the rent through the new benefit.
  • Evidence from Scotland’s CAB network and elsewhere indicates the incidence of rent arrears to be far higher amongst tenants receiving Universal Credit. Housing associations across the UK report that 73% of tenants on Universal Credit are in arrears, compared to 29% of others.

Case studies included in the report highlight the how clients have suffered due Universal Credit admin delays and the length of wait for the first payment.

In the west of Scotland, a client received a call from his local authority landlord stating that he has rent arrears of £641. The client was aware of some arrears, but it seems that his direct housing payment from Universal Credit was not made to the council, despite being deducted from his Universal Credit award, so his arrears have increased by £309. When the CAB adviser contacted the local authority housing team they advised that this is “a common problem” and there are lengthy delays with the local authority receiving the payments from the DWP.

A woman in the south of Scotland stopped work three months ago, due to stress and bullying. The gap between the Universal Credit assessment period and when she last received her wages, meant she had no payments for a month. She had £30 to last her for four weeks and was being called “constantly” by her housing association regarding a week’s rent arrears.

The high cost of temporary accommodation rent was also among the most common reasons for rent arrears.

In the west of Scotland, a woman who is living in temporary homeless accommodation found that her housing benefit does not cover the full costs of her rent. Her arrears are accruing on a weekly basis but she works part-time and pays a lump sum towards the debt when she can. She has applied for Discretionary Housing Payment twice but she was been declined on both occasions.

CAS recommendations for action to help reduce the problem include action to:

  • Fix issues associated with Universal Credit
  • Promote methods of support to pay rent
  • Ensure that housing support covers the full costs of accommodation
  • Ensure that rent levels are affordable
  • Encourage landlords to follow best practice in dealing with rent arrears
  • Ensure tenants receive the best advice and support when faced with arrears or potential eviction.

CAS spokesman Rob Gowans said: “The rise in rent arrears is one of the most worrying trends we see across the CAB network at the moment. While there are a number of factors driving this, we have no doubt that the flaws in Universal Credit are one of the main ones.

“For the past 18 months we have been calling for a halt and fix to Universal Credit. Some welcome changes have been made but many of the problems still remain and this report shows the impact these are having on peoples’ lives.

“We have set out again today the key flaws that need to be addressed, including reducing the waiting period before payment, cutting out processing delays and reducing deductions. These are relatively simple changes that could make a huge difference to millions of people.

“In our report we also set out other causes of rent arrears, such as rent increases, low wages and lack of support for those in need. All of these need to be addressed as well as Universal Credit, and we will continue to work to highlight these problems and help find solutions.”