Wales: Universal Credit and the impact of the pandemic
Our Welsh Policy Officer, Tim Thomas, looks at the impact Covid has had on tenants in receipt of welfare and benefits and what support is being offered to both landlords and tenants to keep tenancies going.
The Private Rented Sector (PRS) continues to be an important sector in helping house vulnerable people, especially during these difficult times during the pandemic. The sector continues to see growing number of tenants in receipt of benefits. The number of PRS tenants in receipt of Universal Credit in Wales has increased by a staggering 77% from February 2020 to February 2021.
The PRS continues to be more diverse with more elderly people, families, and people in receipt of a means-tested benefit accessing the PRS. Looking at the picture in Wales, there is a high number of individuals who have either a disability and/or are on long term sick leave. This might account for lower levels of people in receipt of Universal Credit accessing the PRS in Wales than in Britain overall.
One major challenge which particularly affects Welsh tenants is the shortfall between Local Housing Allowance rates and their rents. Of the 63,862 households in Wales above, 44,984 (70%) had a UC award where the Local Housing Allowance rate did not cover their rents.
This is especially problematic in pre-industrial areas – such as the South Wales Valleys – where rents have not increased at the same rate of other parts of the country. Therefore, the NRLA continue to campaign for LHA levels to be pegged at least to the 30th percentile and to be topped up to keep pace with market rents.
In addition to this challenge, research from BVA/BDRC in the first two quarters of 2021, suggests that a significant number of Welsh landlords experienced issues relating to rent arrears over the course of the previous year. The research also reveals that landlords in Wales experienced a significantly higher incidence of rent arrears than their counterparts in England in the first six months of 2021.
Despite the economic challenges, there is very little appetite for landlords to seek possession. We have also seen many examples of landlords supporting their tenants including rent holidays and rent reductions. Our survey data further reveals that, of those Welsh tenants who went into arrears, 64% were supported by their landlords.
Given the continued adverse economic outlook, our concerns over rent arrears continue. We are pleased to see that the Welsh Government have introduced the Tenant Hardship Grant (THG), a grant ringfenced for PRS tenants in Covid related arrears who are not on a means tested benefit.
In addition, those tenants who are on means tested benefits – including Universal Credit– can be supported in their rent with Discretionary Housing Payments (DHP). DHP levels have also been topped up for the use of all local authorities in Wales. Landlords can apply for both the THG and DHP via their local authority.
On top of this, the NRLA are continuing to call for benefit reform, including through the continuation of the £20 Universal Credit uplift, the end of the five-week waiting period and to convert advance payments of Universal Credit into grants rather than loans.
Once again, despite the many challenges that it faces, not to mention the financial challenges experienced by landlords themselves, the sector has continued to be resilient. The PRS has supported large numbers of people escape homelessness, has supported vulnerable tenants and has continued to provide housing options across Wales.