Universal Credit: tenants could be 'a broken washing machine away from not paying rent'

Published by Max Salsbury for 24dash.com in Universal Credit and also in Central Government, Finance, Housing

Landlords are being warned to prepare for the worst ahead of the government's welfare reforms, which could leave some tenants "a broken washing machine away from not paying rent”.

Ajay Jagota of KIS Lettings - which manages properties for around 700 landlords across the North East - fears that Universal Credit and a raft of other new government policies may push tenants and landlords alike into financial difficulties.

“News that almost half of British families are struggling beneath the breadline shows how precarious the financial situation is in many UK households – and any unexpected expenditure could leave them with impossible choices. Put simply, they could be a broken washing machine away from not paying rent," said Mr Jagota.

The letting agent is advising landlords to prepare for worst case scenarios by having contingency plans in place should they face a sudden surge in arrears.

The new Universal Credit system will see housing benefit paid directly to tenants rather than landlords.

Data from the government's direct payment demonstration projects shows that a sharp rise in arrears under the new system.

Wakefield and District Housing, one of the organisations taking part in the projects, reported that arrears rose from two percent to 11 percent under direct payments.

Mr Jagota believes that stable long-term tenancies are "the lifeblood of the private rented sector" which the government's reforms are jeopardising.

He said: “The worst of it is, it is clear to me that these pilots are at best partial examinations of the impact of Universal Credit, investigating not the full implementation of Universal Credit but just the direct payments of current housing benefits - so how can it be a worthwhile test of Universal Credit? It could be that the government is going in completely blind."