you might as well ask why loan sharking exists.
Rentiers do not normally want to rent to people on state benefits. When they do, they maximise the rent to the amount the state will pay, plus a small increment. Competition keeps that increment small? sure. But if you increase the benefit, suddenly, rents go up "everywhere" as a non-collusive event (non-collusive? hah)
We see this in Australia in the cost of childcare, and the cost of any service where the government gives a your-choice voucher to the client: the service fees go up beyond the voucher.
Price/Cost disjoin is a thing. Rental is not a "goods" in that sense, its a location-dependent (non) monopoly. So, rent, which was one of my primary concerns, is one of the things which absent rent controls does this. And, if you don't have a car, then if you live in a housing estate a long way from supermarkets you are caught behind the effort to shop cheaper, rather than pay the premium to the small number of local stores who will sell you goods you can carry home.
its not a monopoly, until it is.
Competition typically keeps pricing in check, and as long as there isn't a monopoly or constrained supply/demand, prices are not able to rise too high.
I don't really see how/why this would be magically different.
For example, while rents in SV are sky high, that's a reflection of constrained supply. An apple in SV costs roughly the same as an apple in Bakersfield, despite avg income being multiples higher.
I don't really see how rentals in low income areas would become a constrained supply after the availability of UBI. And the groceries point is just crazy sauce.
I'm aware of very few goods outside of monopolies where the price is determined by the spending power of the purchaser and not the cost of the goods.