The confusion over how rent arrears will be tackled under the Universal Credit scheme has resulted in 39% of landlords with more than 10 properties reducing the number they own, according to the British Property Federation (BPF).

The BPF said that landlord groups, NGOs and Government should all act to reduce the uncertainty of the impact of the Government’s flagship welfare reform after landlords indicated that they are intending to reduce the number of properties they let to those on housing benefit once the changes are activated.

Ian Fletcher, Director of Policy (Real Estate) at the BPF, said: “We urge DWP to implement alongside Universal Credit, a system to inform private landlords when a tenant has a change of circumstances that affects their housing benefit. This basic step will provide reassurance to a landlord and reduce any confusion regarding delayed payments or applications for alternative payment arrangements. 

“The challenges of housing supply are long term issues that will inevitably see the private rented sector continue to be relied upon to house welfare recipients. Universal credit is the most radical change to affect the payment of benefit in several generations and if private landlords do not feel confident they are going to receive rental income, they will vote with their feet and not engage with it.” 

Research by the BPF shows that whereas landlords with experience of housing benefit tenants understood that their tenants required greater levels of support, those landlords who are unfamiliar with the process are less likely to feel confident that their rental income is secure, and are therefore less likely to let to a housing benefit tenant. 

The BPF has called for the following:

• Greater dialogue between landlords, tenants, NGOs and government – at a local and national level – to clearly explain the implications of Universal Credit
• For the Department for Work and Pensions to set out how they will inform private landlords when a tenant has a change of circumstances that affects their housing benefit,
• For the Government to do all it can to ensure tenants do not fall into arrears, including allowing them to chose direct payment from the outset if they are worried about managing their finances, as recommended by the DWP Select Committee