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Universal Credit could limit ability to build new homes, Radian warns

Thursday, 26 October 2017

The impact of Universal Credit on tenants’ finances could significantly affect the ability of housing associations to contribute to the delivery of new homes, according to Radian, one of the largest housing associations in the south of England.

Figures concerning growing rent arrears among tenants of Radian, which manages approximately 20,000 homes, were directly quoted by Alan Whitehead, MP for Southampton Test, during Prime Minister’s Questions last week.

He said:

“[Radian] tells me that 65% of their tenants who are on Universal Credit are now in major rent arrears averaging £700, hampering the association’s ability to get on with building new houses.”

Rent arrears with Universal Credit tenants are only expected to increase as the Department for Work and Pensions prepares for the full rollout of the new benefit later this month. 

Mick Sweeney, Chief Executive of Radian, said:

“In 2015 the Government rolled out Universal Credit across a number of areas where we have housing stock. Since then, we have seen 65% of tenants in those areas, who receive the new benefit, fall into significant arrears. 

“Arrears for tenants in receipt of Universal Credit are 5 times higher than for those not on Universal Credits. Once fully rolled out, this could mean our arrears increase to £9m a year; if this affects all UK housing associations then the sector’s annual income could reduce by £400m a year. So I worry not just for the well-being of our tenants but also for the ability of the housing association sector to borrow the money it needs to develop new affordable homes.

“We want to play an increased role in delivering the homes the country needs, but these growing arrears will have a negative impact on our ability to do this. The government wants us to build more homes, and we welcome the announcement of £2bn new money, yet with Universal Credit, the government is stopping us from building more new homes the country desperately needs.”

Universal Credit was launched in 2013. However, a Select Committee Inquiry is currently reviewing the Department for Work and Pensions’ preparedness for the planned acceleration of the rollout of full service Universal Credit from October 2017.