Rent Arrears Grow 5 Times under Universal Credit.
Happy Christmas Message!
Some of our regulars have suggested that we will soon face a withered JobCentre, information technology supplied by Nintendo, outsourcing of Housing Benefit to Abbots Lettings, payments turned in loans run by BrightHouse, and ‘advice’ services provided by William Hill Racing Consultants.
Jest ye not….
Data and insight provider HouseMark carried out a detailed analysis of benchmarking data submitted by its members to examine the impact of changes in welfare benefits on social landlords’ income, arrears and collection costs.
While rent collection rates have improved over the five-year period, the report also found that more money is being spent on collecting rent each year.
The Welfare Reform Impact Report collected data from a cross-section of members managing up to 2.5 million properties and includes figures from April 2011 up to March 2016.
In October 2016 HouseMark surveyed members of its Welfare Reform Impact Club on the effect of Universal Credit on arrears rates. It found that the average rent arrears debt of a Universal Credit claimant is £618, compared to average non-Universal Credit arrears of £131 per property.
With average social rents around £96 per week, this Universal Credit debt equates to six to seven weeks’ rent.
Across each quartile, rent collection rates have improved over the five years between 2011/2012 and 2015/2016. In spite of this overall improvement, performance in the years 2012/2013 and 2013/2014 worsened before picking up. These years coincide with the introduction of many welfare reforms that affected tenants’ ability to pay the rent.
Using estimates based on members’ data, HouseMark found that more money is being spent on collecting rent each year, and this expenditure is rising faster than inflation. It estimates that UK social landlords spent over £720 million collecting rent in 2015/2016, a real terms rise of over £100m from 2011/2012.
The data suggests that the rise in expenditure on managing rent arrears and collection is driven by an increase in human resources – i.e. more people being employed to collect rent and manage arrears rather an increase in average pay costs.