Social housing tenants on a pilot scheme which pays benefits to the claimant instead of directly to the landlord have run up rent arrears of £180,000.
The figure has been revealed by Wakefield and District Housing (WDH), which estimates that plans to extend the scheme to all tenants, along with other cuts to benefits, will cost the organisation £10m a year.
The direct payments system, part of the government’s Universal Credit, has raised fears that tenants with cash problems will spend their Housing Benefit paying off other debts instead of the rent.
WDH said arrears rose from two per cent to 11 per cent of total rent due among tenants in Pontefract and Knottingley on the pilot scheme.
The government’s ‘bedroom tax’, which cuts housing benefit for tenants with spare rooms, and caps on benefits ,are also expected to hit WDH as it is forced to chase tenants for rent and provide debt support.
WDH is already struggling to provide enough homes, with around 20,000 people on its waiting list.
Chief executive Kevin Dodd said: “The bedroom tax affects more than 5,300 WDH tenants, and 84 tenants are affected by the benefit cap.
“We estimate that the total cost of both to WDH will be up to £5m each year in lost capacity. That’s one new build property per week.
“In short, we believe welfare reform could cost WDH up to £10m each year, the equivalent of losing £300 million from our total business plan.”