Reductions in rent arrears due to direct payments to landlords

New research shows that direct payment of Universal Credit to landlords contributed the most to reductions in rent arrears.

Private landlords renting to Universal Credit claimants can apply to have the housing element paid directly to them when a tenant has reached two months of rent arrears. This is known as an Alternative Payment Arrangement (APA).

Southwark Council was one of the first areas of Britain to see Universal Credit full service roll out. Its rolling reports on the impact of this on housing have found that there is a noticeable decrease in the levels of arrears for those claiming Universal Credit in 2018 compared with those transitioning to Universal Credit in 2016.

The Smith Institute report commissioned by Southwark Council states that "it is the earlier and increased use of APAs, rather than other reforms, which have contributed most to reductions in arrears levels observed".

On average, each person in the 2016 group was six weeks in arrears at the end of the period compared with just under two weeks for the 2018 group.

The report adds: "Originally designed to apply to a handful of cases, more than 40% of Southwark tenants claiming Universal Credit have now entered into APAs with the council to help manage their finances".

Landlords may apply for an Alternative Payment Arrangement but only after two months of rent arrears have built up.

It reports that 54% of those private landlords who have let to tenants on Universal Credit in the past 12 months have seen them fall into rent arrears. Of these, 82% said that the arrears only began after a new claim for Universal Credit or after a tenant had been moved to it from housing benefit.