More than 100,000 children live in families at risk of debt and hardship over Christmas because they are waiting for a universal credit payment, according to estimates by one of the UK’s biggest housing associations.

Claimants who signed up after 20 November will not receive any benefit until after the festive period because of the built-in wait of at least 35 days for a first monthly payment, the Peabody Trust said.

It believes a big chunk of the 110,000 UK households that move on to the system over the next few weeks will be forced to borrow money to see them though until the new year. This includes 67,000 families collectively looking after an estimated 116,000 children.

Peabody called on ministers to reduce the five-week wait to two weeks, bringing it in line with the waiting time for a first housing benefit payment under the old system. This would cut the numbers of households without income over Christmas by 44,000.

Many families would struggle to manage the five-week period without income at one of the most expensive periods of the year, Peabody added. Research carried out over the summer by the housing association found 70% of low-income tenants in London had no savings, and were forced to use food banks or payday loans to cope with a cash crisis.

In an attempt to smooth the financial shock to vulnerable claimants caused by moving on to universal credit, the government made loans available to those who could show they would be unable to pay rent or buy food without an advance. Loans of up to 100% are available, repayable over a year.

Nearly two-thirds of new claimants for universal credit take advances, according to the National Audit Office. However, critics say the advance loan locks claimants into an ongoing financial struggle, especially where claimants have rent arrears or historic debts from tax credit overpayments automatically deducted from their monthly payments.

One in three of all universal credit claimants have up to 40% deducted from their subsequent monthly income to repay advances and debts. The Commons work and pensions committee chair Frank Field has called this arrangement a “nationalised form of debt” that was “fast becoming a main supply route to food banks”.

The government announced it would cut the maximum monthly repayment to 30% at the recent budget, though this will not come into effect until October 2019.

Anya Martin, policy officer at Peabody, said although the government had made welcome changes to universal credit, restoring some of the money previously cut and improving the terms of advance loans, the five-week wait for universal credit payments was “still causing significant hardship”.

She said: “People having to use their benefits to repay the government means that this hardship continues even when regular payments have kicked in. Reducing the waiting period to two weeks from the start of a claim would make a huge difference to thousands of vulnerable families across the country.”

The five-week delay – designed to mimic monthly salary patterns in which wages are paid a month in arrears – was criticised by the UN rapporteur Philip Alston in his recent report into poverty in the UK. The long wait, which in practice often stretched to 12 weeks because of administrative glitches, pushed many claimants into survival mode.

“The rationales for the delay are entirely illusory and the motivation [for designing a five-week wait] strikes me as a combination of cost-saving, enhanced cashflows, and wanting to make clear that benefits should involve hardship. Instead, recipients are plunged into further debt and inevitably struggle mightily to survive,” Alston wrote.

Universal credit was developed as a way of wrapping six separate benefits into one and making the social security system more efficient and improving incentives for claimants to move into work. However, it is running six years behind schedule and its widespread problems are linked to claimant poverty and ill-health.

New benefit claimants in most of the UK now move automatically on to the new system. Areas transferring on to universal credit in the next few weeks include postcodes in north-west London, Derby, Stoke-on-Trent, Wolverhampton, Edinburgh, Glasgow, Wakefield, Portsmouth and Milton Keynes.

A Department for Work and Pensions spokesperson said: “There’s no reason for people to be without money over Christmas because advance payments are widely available. Anyone applying for Universal Credit can get an advance of up to 100% upfront, payable on the same day if someone is in urgent need.”