South Tyneside Council is facing a £3m housing rent shortfall as thousands of tenants fight a cost of living crisis.
Housing chiefs admit they are currently trying to claw back £2m owed by 7,000 of the council’s 18,000 tenanted households – an average arrears of £285 each.
But they also fear an extra £1m could be added to that figure due to the possible impact of the Universal Credit benefit system, being rolled out in February.
They say the seven weeks claimants will have to wait for payments could have a severe knock-on effect in areas such as accommodation.
The current shortfall, which stands at just under £2m, is itself an increase of £600,000 since 2012.
Today, Coun Ed Malcolm, Lead Member for Resources and Innovation and Chair of South Tyneside Homes, the council’s housing management body, claimed several factors were involved.
He cited the government’s austerity programme, the rising cost of utility bills and welfare reforms as contributing to the increase in rent arrears.
Coun Malcolm said: “We have already seen a rise in arrears since the initial pilot of Universal Credit in South Tyneside and are anticipating further significant impact when it is fully rolled out next year.
“However, as a social landlord, we take a proactive, early intervention approach to rent arrears and provide advice and welfare support services to help people maintain their tenancies.
“In the last year, we have seen a 12% increase in the number of tenants paying their rent by direct debit, thanks to promotional campaigns.
“Our Homefinder service advises on benefits and negotiates with lenders on behalf of those in payment difficulties.
“Eviction is always a last resort and is used when all other methods of engagement and arrears collection have failed.”
Ian Thompson, chief executive at Citizens Advice Bureau in South Tyneside, said: “We are undoubtedly facing a crisis and the council has rightly said that rent arrears could rise.
“The biggest debt factor used to be consumer credit, such as credit card spending, but it is now just things like rent and council tax.
“South Tyneside has never recovered from the economic downturn and added to that has been welfare reforms and now Universal Credit.
“These have put people in debt and have led to an increase in things like rent arrears.”