Property owner says she will not rent to recipients again – as fears rise more will follow suit

A Croydon-based landlady has vowed never again to let her property “to anyone on universal credit” after the tenant installed by the council was switched to the new benefit and disappeared owing her around £9,500 in rent.

Amira Khan* says she feels let down, angry and “in debt to everyone” as a result of Croydon council being one of the first to adopt the government’s flagship universal credit scheme, whose rollout is proving controversial.

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Until now, much of the criticism of the benefit has focused on tenants being evicted for rent arrears following delays in payments. But Khan’s case shines a light on the damage the rollout could inflict on landlords and their future willingness to accept tenants in receipt of it. This week, Lincolnshire property company GAP Property threatened all its tenants with eviction if they failed to pay their rent because of delays in universal credit payments. The scheme is about to rolled out in the area.

Khan, who owns two flats and says the rent they generate is her only source of income, took on the tenant – a single mother – in 2013 after being given verbal assurances by Croydon council staff that the rent of £868 per month would be covered by housing benefit.

She says the council drew up the tenancy agreement, also signed by a staff member. The landlady says all was well until January this year when the rent was not paid for the first time. When she approached the local authority she was told that it was no longer paying her tenant’s rent as the tenant was claiming universal credit. But the tenant told Khan her payments had been delayed.

At this point, the health of Khan’s husband, for whom she had been a long-term carer, worsened and he died a few weeks later. While trying to cope with his death, she says she tried to chase the rent arrears but to no avail.

The council who got me the tenant can’t or won’t help, and dealing with the new people is terrible

In May her lawyer sent the tenant a formal request for payment of arrears and, after no response, an eviction notice was sent. The tenant countered this by saying she was being harassed and threatened to call the police.

In June, Khan learned that the tenant had been paid the back rent by universal credit staff. As it had not been passed on to her, Khan was told to fill in a UC47 form that allows landlords to claim rent arrears from the Department for Work and Pensions, which administers the benefit. She says she sent this in twice, but was later told it had not been processed as staff did not have the tenant’s national insurance number. Then the tenant disappeared, leaving the flat in a dreadful state, according to Khan.

The landlady says she is owed around £9,500 in rent and has had to spend £2,500 on repairing damage to the flat. “The whole thing has been dreadful and I feel let down,” Khan says. “The council who got me the tenant can’t or won’t help, and dealing with the new people is terrible. I know one thing – I will never have anything to do with anyone on universal credit again. I feel really angry about it all.”

A Croydon council spokesman said: “Housing benefit rules allow councils to transfer tenants’ payments direct to private landlords to help prevent arrears. As in this case, councils are not allowed to get involved in rent payments once the tenant moves to universal credit, which is run by the DWP.”

The council says it has suffered its own rent arrears problem since the new benefit was introduced. In February it said its rent collection rates had fallen from 91% to 59% for claimants. It has warned that without changes the system could have a devastating effect as it is rolled out over the next few months.

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Heather Spurr, lead policy officer on universal credit at Shelter, says the homeless charity fears more landlords will follow Khan’s lead and refuse to take tenants who receive the credit. “Landlords refusing to take tenants in receipt of housing benefit isn’t a new phenomenon, but there is evidence that problems around the credit are exacerbating this,” she says. “More landlords are deciding they don’t want the hassle.

A DWP spokesperson says: “Under universal credit, people are moving into work faster and staying in work longer than the old system. Over time people adjust to managing monthly payments and reduce their arrears. The majority of people are comfortable managing their money upfront but budgeting advice, benefit advances and direct rent payments to landlords can be provided for those who need it.”

* Not her real name