Mar 13

Universal Credit Trial: Arrears soar during pilot

A government run pilot to ‘test run’ the new housing benefit system has seen arrears rates rise and claimants fall into debt – and the introduction of the new welfare payment system is only weeks away.

Under the proposed new system, tenants in receipt of housing benefit will have their money paid directly to them, rather than direct to the landlord. The system is meant to encourage good housing keeping, financial awareness and responsibility. However, during pilots in Edinburgh, Wakefield, Shropshire, Oxford, Cwmbran and Southwark in south London have seen up to a 50% increase in arrears.

The pilot test’s figures make for grim reading to any private landlord. Arrears among tenants of Wakefield and District have increased from an average of 2% to 11%. Bron Afon community housing in south Wales saw a 50% increase in arrears, while pilots in Edinburgh, Oxford and Southwark are reported increase of around 30%.

Perhaps most worrying for private landlords is the increase in arrears amongst people who have never fallen behind in their rent before. The extra stress for landlords is that they will then be sucked into lengthy eviction processes. As Duncan Forbes, chief executive of Bron Afon, said: “People have clocked up arrears who were not in arrears before, and the worry is will they panic, will they stop paying, will they feel they've lost control and end up being evicted."

The government says it will learn the lessons from the pilot projects, but with Universal Credit being implemented in April, is there enough time to iron out any problems?

Do you think you will see a rise in landlords starting eviction proceedings because of the changes to the welfare system? How do you think Universal Credit will affect your rental portfolio?

About the author

Eddie Hooker Photograph Eddie Hooker has been involved in the insurance industry since 1985.  He worked with many large insurers such as Legal & General and AXA Insurance prior to setting up his own insurance business, Hamilton Fraser, in 1996.  Hamilton Fraser now employs over 130 staff out of their North London office, dealing with various insurance products for the buy-to-let property market such landlord insurance, rent guarantee insurance, emergency cover and tenancy deposit protection. 

Eddie and Hamilton Fraser Insurance first started to provide landlord insurance as early as 1996 when they became involved with the Small Landlord Association, which later became the National Landlords Association. 

By working closely with the industry’s leading companies Eddie and his team have built up a detailed understanding of the landlord market ensuring that the customer experience is founded on knowledge and support.  This has been highlighted in a recent customer survey that found that 95% of Hamilton Fraser customers were either satisfied or more than satisfied with the service provided by the company.

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