The universal credit implementation has continued to have major issues not only for a variety of different groups of people. This includes welfare recipients, the sick or the disabled and many more, with 17,000 disabled or unwell people have passed away since Universal Credit was introduced. What's more, 150,000 additional deaths have occurred due to ‘economic murder' – such named in a 2017 study – with more than 90 deaths a month occurring from people who have been deemed ‘fit to work’ but are not capable of doing so. After the above, it now looks like these occurrences are starting to affect the property market, especially councils. The scheme has forced some councils to put a hold on plans for new government housing due to the issues with the payments.
The concept of Universal Credit was proposed to make the process for welfare recipients far more efficient and effective. It was designed to take the current six different payments/benefits of Housing benefit; Income Support; Working tax credit' Income-based Jobseeker's allowance; child tax credit and income-related employment support allowance and turn it into one payment that would be paid every month.
Although the concept of streamlining the payments sounds attractive it has not had the desired effect, the costs associated with the universal credit system has seen efficiency-related costs grow from £2 billion to over £12 billion. There have been numerous issues related to qualification for payments which has seen some recipients have their payments cut to levels below the poverty line. This is as well as claimants denied qualification at all or even declared fit to work when they have significant health issues. As the system implementation has continued, horror stories have started to surface regarding the human toll that the new system is having.
In June of 2019, Sean Doherty of Glasgow took his own life after confusion over a carers payment for his father had caused him to live on as little as £30 per month. Sean had been suffering depression after his father had passed away as he was the sole carer. The confusion arose when the universal credit system was claiming he was still being paid a carer's allowance even though his father had passed. In February 2019 a disabled Plymouth man, Neil wright had his payment cut to 1p and forced to live on 77p for over two weeks. These kind of hardships are becoming all too common from a system that was designed to improve welfare recipients lives.
The flow-on effect of these system issues and the minimum 5-week delay in payments has caused significant arrears in the rental market, Especially in council-owned properties. Under the previous system, housing benefits were able to be paid directly to the landlord, this vastly cut down on homelessness and gave local councils sufficient cash flow to support new housing developments.
It has been seen that recipients on universal credit are on average in twice the amount of rental arrears compared to those on the old system of the housing benefit. Under the new system, landlords can only apply for direct payment after two months in arrears has been reached, this means that the eviction notice may already be reached before becoming eligible for direct payment. In some cases, this has caused landlords into a quick sale property transaction due to insufficient cash flow.
This has caused a significant reduction in the rental funds being received by local councils and has stifled construction projects for new housing supply. Richard Watts of the local government association stated: "We need to build a lot more new genuinely affordable housing, particularly council housing – and that's harder if councils are getting less money into their housing account because rent arrears are higher".
The lack of affordable housing supply has had the effect of a significant reduction in property cash buyers in the market, when there are no buyers there is no demand and prices must drop to meet it. If sellers in the current market are looking to sell fast, then they will be facing huge issues due to the cycle of rental arrears, lack of buyers demand and perpetual renting. Universal credit's implementation has been pushed back by 6 years and it is creating more problems for the housing market and making a pitiful attempt at fixing the issues it proposed to fix in the first place.
Are you worried about the housing crisis and want more information? Contacting Sell Fast for advice can help, as we buy any house. Call 0800 368 7399 or request a call back to find out more information about selling your home.