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Arrears amongst Universal Credit tenants double as benefit changes take effect

Tenants of a Birmingham housing trust are being offered access to a special ‘bank’ account after the roll-out of a new benefit has seen rent arrears for recipients more than double in five months.

Bournville Village Trust has seen the number of its tenants on Universal Credit increase from 51 in February this year to 149 in July, as more families are moved onto the new benefit.

Those claiming Universal Credit are increasingly falling behind on their rent as a result of the changes, with arrears jumping from £26,880 in February to over £58,650 in July.

The sharp increase in arrears is being put down to two factors, delays in receiving a first Universal Credit payment and the amount tenants are able to claim for.

In response, the Trust has partnered with credit union Citysave and the Illegal Money Lending Team to offer tenants, subject to Universal Credit, access to a special ‘Tenant Account’.

The account, part of a pilot project, allows tenants to ring fence their rent from their benefit payment, ensuring it is paid on time and direct to Bournville Village Trust.

Tenants can also use the account to budget for other bills and set limits for the amount they want to spend on things like food, gas and electricity each month.

Arthur Tsang, Head of Housing and Customer Services at Bournville Village Trust, said: “Some tenants have found the move to Universal Credit particularly tough, especially those already experiencing financial difficulty, and as a result have fallen behind on their rent, which puts their tenancy at risk.

“We want to work with tenants to help them successfully manage their rent accounts, stay out of arrears and protect their tenancy, and this new Tenant Account is just one of the ways we are doing this.

“The Account is approved by the Department for Work and Pensions (DWP), is free to open and has features that make managing money much simpler. Rent is ring fenced so tenants always know it is paid on time and they can feel more secure and stable in their home.”

Nigel Bailey Chief Executive of Citysave, said: “Citysave see the Tenant Account as a simple solution to remove some of the worry tenants face in arranging to settle their rent.  Some tenants find the mechanics of arranging a regular payment from their bank difficult to arrange and the Tenant Account offers a neat alternative.

“We hope the solution will provide help to tenants and landlords as we go through the transition into Universal Credit payments.”

The Tenant Account is currently only open to tenants who are receiving or are due to move onto Universal Credit. To apply for an account, Bournville Village Trust tenants can go direct to www.citysave.org.uk/citysave-tenant-account or contact the Trust’s Income team on 0300 333 6540 to discuss in more detail.

According to the National Federation of ALMOs and the Association of Retained Council Housing, which represent over a million council homes, nearly three quarters of households claiming Universal Credit were in arrears compared with 26% of all households.*

They also found evidence that it can take up to 24 months to clear the debt built up in the transition to the benefit.

Bournville Village Trust is a housing association and charity founded by chocolate maker and philanthropist George Cadbury in 1900. Its vision is to create and sustain flourishing communities where people choose to live and it provides services to 8,000 homes of mixed tenure and 25,000 people.

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