Universal credit will lead to a “steady decrease” in the number of landlords willing to rent out properties to benefit claimants because it encourages tenants to fall into arrears, the National Landlords Association (NLA) has warned.

Only 18-20% of private landlords accept tenants who pay their rent with local housing allowance (LHA), the housing benefit that will eventually be replaced by universal credit – down from 46% in 2010/-11, the NLA said.

The latest survey of NLA members showed that 68% of landlords with LHA tenants and 63% with other benefit recipients experienced rent arrears in the last 12 months. LHA tenants owed an average of £2,263, compared with £1,774 by all tenant types.

Richard Lambert, the NLA chair, said LHA claimants fell into arrears because the allowance did not cover the cost of housing. Rents have gone up typically by 2-3% annually while benefits have been frozen, and many people struggle to make up the shortfall from other benefits if they are not in work.

“We expect this problem to be exacerbated by universal credit when it rolls all the benefits together in one monthly payment,” he said, adding: “We expect to see a steady decline in landlords being willing to rent to benefit claimants in the next 18 months to two years.”

Almost a third of landlords have sought vacant possession of one or more properties from LHA tenants, compared with 15% overall, Lambert said.

In areas where UC has been introduced, landlords report a dramatic increase in non-payment of rent.

Under universal credit, payments of housing benefit for new single claimants is replaced by a “housing costs element” included in their UC award. In most cases it is the claimant’s responsibility to pay the rent to their landlord from this award.

In Buxton in the Peak District, where single people have been on UC for two-and-a-half years, one letting agency said 90% of its UC tenants were in rent arrears.

SJ lettings, which specialises in renting out rooms in shared houses, said that of its 20 UC tenants, nine have already been evicted for failing to pay the rent and a further nine were in serious arrears. Only two people were keeping up with their rent payments.

Simon Graham, the director of SJ Lettings, blamed the problems on universal credit, coupled with the harsh sanctioning regime for jobseeker’s allowance claimants.

“In theory, universal credit is an empowering idea, encouraging people to learn to budget for themselves, but for the more vulnerable tenants, someone with drug or alcohol issues or mental health problems, being given £600 at the start of the month and expecting them to make it last until the next month is just not realistic,” he said.

Buxton has seen a rise in drug-related problems since the rollout of UC began, he claimed, saying: “It’s anecdotal but to me there is a correlation between tenants being paid their housing benefit directly and the rise in the buying and selling of drugs in Buxton.”

Landlords do not want to evict their tenants, Lambert said, claiming it costs an average of £1,800 to cover the cost of ending one tenancy and starting another.

“Landlords and property owners often get bad press and often for good reason, but we look after a couple of landlords who have just one property they rent out as their pension. They are sympathetic to their tenants but if they do not receive that rent then they are the ones who fall into hardship,” said Graham.

Ruth George, the Labour MP for High Peak, where Buxton is located, recently set up an all-party parliamentary group for MPs to discuss problems with UC.

“You can’t say to private landlords that they should just soak up the losses. It’s just not practicable for them, unlike perhaps big social landlords who can take more of a hit,” she said. “They do not receive the arrears back in the vast majority of cases and so it is not surprising if they cut their losses.”

A spokesperson for the Department for Work and Pensions said: “Universal credit lies at the heart of our commitment to help people improve their lives and raise their incomes. It provides additional, tailored support to help people move into work and stop claiming benefits altogether.

“The vast majority of claimants tell us they are comfortable managing their money. Budgeting support is there for anyone who needs it and arrangements can be made to pay rent direct to landlords if needed.

“From April, anyone in receipt of housing benefit who moves on to universal credit will continue to have their rent paid for two weeks during the wait for their first payment.”

In Buxton, as in many other towns and cities in the UK, a boom in student accommodation has provided landlords with another safer and more lucrative option, said Graham.

The University of Derby has a campus in Buxton, where students expect to pay £128 a week for a room, while LHA is only £67.93 for a single person under 35, he said. “If you are a businessman and are looking to maximise profit, why would you even take the risk of accepting a tenant on universal credit?”