Tenants in south Wales taking part in a trial of the
UK government's benefits reforms have seen rent arrears rise seven-fold to
£140,000 in seven months.
Landlords
in the pilot area in Torfaen warn evictions could increase if the trend
continues after the system for paying benefits is fully adopted.
Housing
benefit is currently paid to the landlord but it will transfer to the claimant
under the reforms.
The
minister in charge said it would help people to manage finances better.
However,
an investigation by BBC Radio Wales' Eye on Wales programme highlights concerns
that changes to the benefits system - beginning with the introduction of the
so-called "bedroom tax" from April - could push both social housing
tenants and landlords into financial difficulties.
Torfaen
is one of six areas where the Department of Work and Pensions is running what
it calls "demonstration projects" ahead of the introduction of the UK
government's flagship welfare reform of Universal Credit in the autumn.
Eye on
Wales has learned that the first group of Torfaen tenants selected for the
trial saw their total arrears rise from around £20,000 to approaching £140,000
in the seven months from July to January.
Under the
reforms, claimants' benefits will be rolled into one credit paid directly to
their bank account on a monthly basis.
Housing
benefit will become part of the Universal Credit, signalling an end to the
current system where payments are made straight to local councils or housing
associations, reducing the risk of the 100,000 social housing tenants in Wales
falling into arrears.
Bron Afon
Community Housing, the biggest social housing landlord in Torfaen with 8,000
properties, has 950 tenants receiving direct payment of their housing benefit.
Chief
executive Duncan Forbes described the rise in arrears to almost £140,000 as
"significant", adding that a large proportion of the tenants were
"never in rent arrears before".
"That
was a group of people who had a good track record of payment and pretty low
level of arrears, thrust into a position where they are now is significant
arrears," said Mr Forbes.
"At
the same time we've increased our staff levels by about double what we would
normally put into income recovery.
"We've
been very successful up to now in getting the number of evictions right down.
'Squeezed and squeezed'
"But
we can see that inevitably steadily rising.
"The
difficulty for us is that if there's no long-term solution to paying that rent
we can't sustain business as a landlord."
That
combination of reduced income and increased costs concerns Nick Bennett, group
chief executive of Community Housing Cymru, which represents housing
associations across Wales.
He said
its not-for-profit members use funds from the private and public sector with
private funding, over 90%, coming from banks.
"If
we have a model that starts to unravel because the people that we are trying to
help can't afford to pay their rent, then that model could become
unsustainable," he said.
"Or
you have banks that are under pressure from their regulator to build up their
balance sheets, looking for excuses to re-price the debt that is currently held
by housing associations.
You only need a broken washing machine or cooker and
suddenly you are in a real difficult bind in missing your rent”
Steve ClarkeWelsh Tenants
Federation
"So
we could end up getting 'whammied' twice - more expensive lending from the
private sector, less support from the public sector - and the misery of our
tenants getting squeezed and squeezed from both sides."
Steve
Clarke, managing director of Welsh Tenants Federation, told Eye on Wales that
direct payments are one of the two major causes of concern.
The other
is the housing benefits changes - or so-called "bedroom tax" - that
come into force next month, which Mr Clarke's organisation has estimated could put
4,000 Welsh social housing tenants at risk of eviction even before Universal
Credit begins.
"The
general principle of Universal Credit is good but it is happening too
fast," he said.
"The
voluntary sector can't keep up with the changes, there's not enough support
there to help people make the transition.
"There
are a lot of people out there that are finding it difficult on very small
incomes to be able to manage their budgets.
"You
only need a broken washing machine or cooker and suddenly you are in a real
difficult bind in missing your rent."
Similar
concerns have been voiced by a Commons select committee which last November
warned the Department of Work and Pensions not to rush into launching Universal
Credit.
Its report said: "We believe
that time needs to be allowed for a proper evaluation of the pilots which the
government is running on direct payments to tenants, followed by a phased
implementation of direct payments, after appropriate safety net arrangements
for vulnerable people have been developed and tested."
The
Department of Work and Pensions said it was committed to supporting vulnerable
claimants.
Welfare
reform minister Lord Freud said: "We've always been clear that Universal
Credit will be simple and easy for claimants to access and we will ensure that
vulnerable people get the support they need to make a claim and budget their
finances.
"Millions
of people will be better off on the new benefit."
