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Landlords issue stark warning over universal credit as two thirds see tenants fall into debt

Nearly two thirds of personal landlords have seen tenants receiving universal credit fall into lease arrears, new analysis reveals, amid rising concern the brand new profit system is pushing individuals into poverty.

A survey by the Residential Landlord Affiliation (RLA) discovered 61 per cent of landlords had common credit score tenants who have been struggling to pay their lease, in comparison with 38 per cent final yr and 27 per cent in 2016.

Claimants owed nearly £2,400 in lease funds, a rise of almost 50 per cent on the earlier yr, the place the determine was round £1,600, the RLA stated.

It comes as the federal government confronted a backlash over the flagship welfare reform, which rolls six working-age advantages right into a single fee, prompting warnings from two former prime ministers it might usher in issues just like the ballot tax riots below Margaret Thatcher.

Esther McVey, the work and pensions secretary, additionally admitted some individuals “may very well be worse off” once they change over to the profit, solely a day after Theresa May promised that claimants wouldn’t lose out.

The RLA known as for an pressing overhaul of how common credit score is paid, as greater than half of landlords utilized for the profit to be paid to them as a substitute of the tenant, which, on common, took greater than two months to rearrange.

David Smith, RLA coverage director, stated: “Our analysis reveals clearly that additional modifications are urgently wanted to common credit score.

“We welcome the constructive engagement we’ve got had with the federal government over these points however extra work is required to offer landlords the arrogance they should lease to these on common credit score.

“The impression of the bulletins from the autumn finances final yr stay to be seen. Nonetheless, we really feel a serious begin can be to offer tenants the correct to decide on to have funds paid on to their landlord.”

In addition to that means claimants might get into debt, the system might additionally dissuade non-public landlords from taking over common credit score tenants.

A fifth of landlords additionally reported that their mortgage lender prevented them from renting houses to tenants in receipt of advantages.

Housing federations have beforehand warned that 73 per cent of social housing tenants claiming universal credit were in £24m of rent arrears, compared with less than a third (29 per cent) of other tenants. 

Former Tory prime minister Sir John Main has known as for a rethink on the profit overhaul, whereas Labour ex-prime minister Gordon Brown warned it might trigger “ballot tax-style chaos”.

Theresa Could can also be going through backbench anger forward of a key vote on common credit score subsequent month, as rising Tory star Johnny Mercer, Iain Duncan Smith and Nigel Mills all overtly calling for massive modifications to the reforms.

A Division for Work and Pensions (DWP) spokesperson stated: ”We’ve got already made vital enhancements to common credit score (UC) together with offering two weeks’ further housing help for individuals shifting onto UC from housing profit, in addition to eradicating the seven ready days and making 100 per cent advances obtainable.

“And because the RLA recognises, the impression of those modifications remains to be to be felt.

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“Direct funds are usually not new to UC and housing profit has been paid on to claimants within the non-public rented sector since 2008.

“With UC, housing prices might be paid on to landlords if requested and we’ve got already made numerous modifications to enhance this course of.

“We’re working carefully with the RLA, contemplating their analysis rigorously, and additional enhancements are deliberate to make Different Fee Preparations (APAs) to landlords simpler, sooner and safer.”

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