Staff costs for universal credit â€˜unsustainable'
A trial by a housing association suggests that it will face a £1.2m blow.
A Salford-based landlord has found that the cost of managing direct payments of universal credit to prevent arrears could be ‘unsustainable.’
City West Housing Trust carried out its own pilot from July 2013 to March this year, to test the direct payment of benefit to tenants ahead of the wider roll-out of universal credit over the next three years, reports Inside Housing.
Its results show that the 14,600 home landlord, under which 52 tenants receive housing benefit direct, had an average rent collection rate of 99.18%.
The figures are better than those for the Department for Work and Pensions’ six official demonstration projects, which found a rent collection rate of 95% across 4,719 tenants.
Yet when it came to calculating the landlord’s management costs, the estimated staff time rose in this period from £178.94 to £754.88 for direct payment project cases. This was due to increased expenditure, which included home visits to tenants to collect rent and provide support.
It is estimated that if this cost were extrapolated across the 2,000 City West tenants set to receive direct payments, the cost would be around £1.2m.
Justin Freeman, head of income management at City West, said: “Our projections show it would cost in excess of £1.2m to deliver this level of ongoing support, which we know is unsustainable in the long term.”
To combat this, City West recommended that landlords move prompt-paying tenants on to direct payment early to free up resources for those with the greatest need
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