A new benefit set to be fully rolled out across the city next month could lead to an increased risk of owing rent, according to a new report.
Universal credit – which will replace six means-tested benefits – is due to be rolled out in full in Aberdeen on October 31.
A new report, to be presented to members of the city council’s audit, risk and scrutiny committee, said there is an “increased risk” of rent arrears as a result of universal credit replacing housing benefit.
It added: “Another Scottish local authority has reported an increase in rent arrears of 26% in the first six months following full service universal credit roll-out, with the number of tenants claiming universal credit who are in rent arrears totalling 71.9%.”
The report adds a claimant’s rent universal credit rent award can be decreased by the Department for Work and Pensions (DWP), if the claimant fails to seek work, for example. It adds this “increases the risk” of tenants failing to pay rent due to a lack of funds when rent is due.
The local authority has not set aside extra money for this financial year to allow for an increase in bad debts due to universal credit. But the report states the council’s finance team has agreed to review this when it sets future budgets.
It adds the council’s rent arrears policy highlights the importance of identifying vulnerable clients who may struggle to make rent payment.
The DWP forecasts that by next March more than 2,600 people will be claiming universal credit in Aberdeen. Universal credit rent payments will be made directly by the DWP to the claimant who will then be responsible for paying rent to their landlord – the council.
The benefit replaces child tax credit, housing benefit, income support, working tax credit, income-based jobseeker’s allowance and income-related employment and support allowance.
The committee will consider the report on Tuesday.