With Universal Credit problems forcing a growing number of claimants into destitution and rent arrears, anti-deposit campaigner Ajay Jagota is urging more buy-to-let landlords and letting agents to consider the benefits of deposit-free renting.
Figures from last week’s BBC Panorama show tenants claiming Universal Credit - which replaces six working age benefits - have more than double the rent arrears of those who have yet to move to the new benefit system, presenting fresh problems for many landlords and letting agents.
A survey of Universal Credit claimants in every local authority area where the changes have been implemented shows they owe their landlords £662.56 on average, compared with £262.50 for those on traditional housing benefits.
The data also suggests that evictions have increased by 55% in just one year in areas when Universal Credit has been implemented.
The Citizen’s Advice Bureau last month reported that the number of renters seeking advice from them relating to rent arrears has risen by 47% since the rollout of Universal Credit began.
The government plan is for almost seven million people to be on Universal Credit by the end of 2023, but the new system has been hit by delays, which is why the new Work and Pensions Secretary Amber Rudd yesterday conceded the system “can be better”.
However, despite Rudd’s pledge to “learn from errors” and “adjust” the new system, Jagota, managing director and founder of zero deposit rent provider Dlighted, expressed his concern.
He said: “There’s a lot to be said for Universal Credit’s intention of making our benefits system simple and fairer, but there’s no getting away from the fact that its implementation is yet another thing that landlords and letting agents alike have to come to terms with.
“The deposit protection industry tells us that old-fashioned tenancy deposits are the only way to keep yourself safe from rent arrears – but in reality they only cover you for a month of rent arrears. What happens if you’re owed two months rent? Or three months?
“All the evidence suggests that there is a strong link between Universal Credit and rent arrears, and if deposits won’t protect you if your income is hit when Universal Credit arrives in your area.
“Deposit free renting is something which could be a real benefit to landlords and letting agents who find themselves faced with rocketing arrears following the rollout of Universal Credit in their area, offering them hundreds of thousands of pounds of protection against unpaid rent, property damage and legal fees, while also making it easier and quicker to find new tenants if eviction becomes unavoidable.”