A Lincolnshire property company has defended threatening all of its tenants with eviction if they fail to pay their rent because of delays in receiving universal credit payments, after sending all tenants pre-emptive notices ahead of the rollout of the welfare reform.

The letter from GAP Property in Grimsby was highlighted by Jeremy Corbyn during prime minister’s questions in the Commons on Wednesday. Corbyn said tenants of the property management company faced the prospect of being made homeless before Christmas. Theresa May said she would look into the “particular case” raised by the Labour leader.

GAP Property said the introduction of universal credit would affect the vast majority of its tenants and it needed to take action to avoid a slew of rent arrears, which could put it out of business.

The company’s owner, Guy Piggott, told the Guardian the letter was not intended to be threatening and he was pleased it had been highlighted by Corbyn.

“We are not planning to throw people out, but the prime minister should read this and recognise the problems, and see how people are not going to be able to feed themselves,” he said.

Quick guide What is universal credit and what are the problems? Show Hide What is universal credit? Universal credit (UC) is the supposed flagship reform of the benefits system, rolling together six benefits into one, online-only system. The theoretical aim, for which there was general support across the political spectrum, was to simplify the system and increase the incentives for people to move off benefits into work. About 2 million people are currently in receipt of UC. More than 6 million will be on the benefit by the time it is fully rolled out. How long has it been around? The project was legislated for in 2011 under the auspices of its most vocal champion, Conservative MP Iain Duncan Smith. The plan was to roll it out by 2017. However, a series of management failures, expensive IT blunders and design faults mean it is now seven years behind schedule, and rollout will not be complete until 2024. The government admitted that the delay was caused in part by claimants being too scared to sign up to the new benefit. What is the biggest problem? The original design set out a minimum 42-day wait for a first payment to claimants when they moved to UC (in practice this is often up to 60 days). After sustained pressure, the government announced in the autumn 2017 budget that the wait would be reduced to 35 days from February 2018. This will partially mitigate the impact on many claimants of having no income for six weeks. The wait has led to rent arrears and evictions, hunger (food banks in UC areas report notable increases in referrals), use of expensive credit and mental distress. Ministers have expanded the availability of hardship loans (now repayable over a year) to help new claimants while they wait for payment. Housing benefit will now continue for an extra two weeks after the start of a UC claim. However, critics say the five-week wait is still too long and want it reduced to two or three weeks. Are there other problems? Plenty. Multibillion-pound cuts to work allowances imposed by the former chancellor George Osborne mean UC is far less generous than originally envisaged. According to the Resolution Foundation thinktank, about 2.5m low-income working households will be more than £1,000 a year worse off when they move to UC, reducing work incentives.

Landlords are worried that the level of rent arrears accrued by tenants on UC could lead to a rise in evictions. It's also not very user-friendly: claimants complain the system is complex, unreliable and difficult to manage, particularly if you have no internet access.

And there is concern that UC cannot deliver key promises: a critical study found it does not deliver savings, cannot prove it gets more people into work, and has plunged vulnerable claimants into hardship.

Universal credit is due to be rolled out across north-east Lincolnshire from 13 December and new applicants will have a minimum six-week wait for their first payments, though many have reported longer delays.

Piggott said serving the notice now meant tenants had been given the mandatory two months’ notice and so could be evicted as soon as their rent payments fell behind.

He said the rollout had forced him to take radical action, saying his company would be “bust in three months” if tenants were unable to pay their rents because of the six-week wait for universal credit payments, especially as he expected many of them would take on temporary work over Christmas and then be faced with a long wait when they reapplied for benefits.

The letter from the agency says it is “not intended to cause alarm, rather to inform you of the problems that could very well occur during the rollout of universal credit”.

It calls the flagship welfare reform “an extraordinary event that requires both you and us to take extraordinary measures”.

It tells tenants: “GAP Property cannot sustain arrears at the potential levels universal credit could create (this affects the vast majority of our tenants), therefore we find it necessary to issue your Notice Seeking Possession … that has been enclosed to be exercised only in the event that you fail to pay your rent in accordance with the terms of your tenancy (in full and on the due date).”

The letter says tenants will face eviction if there is a delay in payment to the landlord. “IF YOU DO NOT PAY YOUR RENT WE WILL HAVE NO OPTION BUT TO ASK YOU TO LEAVE AND RECOVER LOSSES FROM YOUR GUARANTOR,” it writes, in capital letters.

The letter includes a formal notice of possession as well as a guide to universal credit for tenants.

The agency was established more than 30 years ago by Piggott, who is also chair of the local Humber Landlords Association, and says it has a “wide range of properties from rooms in shared houses, flats, to five-bedroom detached houses”.

Piggott said the majority of his tenants were on an average household income of about £17,000 a year. “People are already living hand to mouth. We have spoken to a number of tenants and they do not know this is coming. They might not even know what universal credit is,” he said.

“At best, if they need to wait six weeks to be paid, it will be the end of February before it comes, and by then they might have spent the money they had on feeding their families or heating their homes,” he said.

Piggott said many landlords would soon refuse to take people who were on universal credit. “A lot of landlords are now saying enough is enough,” he said.



Quoting from the letter during PMQs, Corbyn said: “Will the prime minister pause universal credit so it can be fixed? Or does she think it is right to put thousands of families through Christmas in the trauma of knowing they are about to be evicted because they are in rent arrears because of universal credit?”

In response, May said she wanted to “look at the issue of this particular case” but said the government wanted people to be able to manage their own budgets.

The Grimsby MP Melanie Onn, a shadow housing minister, said: “The letter shows what people have been trying to tell the government about the impact of the six-week wait for universal credit.

“Every time, they answer that this won’t be allowed to happen. Now we see the very real outcome of the policy on people’s lives. Putting this strain on people over Christmas is a particularly terrible time and will be an added stress.”

She added: “There have been concerns raised over the issue of people being able to manage their budgets to pay rent. What we see after four months is that those on universal credit in rent arrears has fallen by one-third.”

May’s spokesman later said she had not yet been sent a copy of the letter from Corbyn’s office. “The PM said that she would hope to get the letter from the leader of the opposition, and we will look into it and see what we can find out,” he said.

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