Universal Credit. How it affects Payments to Tenants

10 10 2015

Universal credit is a new benefit that is being introduced in stages across the UK, and by late 2017 the roll out of universal credit should be complete. Universal Credit is a new benefit for people who are on a low income or are out of work.

This new benefit will eventually replace the following 6 existing benefits:

  • Jobseeker’s Allowance
  • Income Support
  • Employment and Support Allowance
  • Working Tax Credit
  • Child Tax Credits
  • Housing Benefit

Payments to Tenants

Universal Credit will be a single, monthly payment which is paid in arrears directly into the tenants account. Payments will include all eligible housing costs.

Most landlords/agents will not see any change with the introduction of Universal Credit as most tenants are already used to receiving their Housing Benefit/Local Housing Allowance payments directly and are responsible for paying their rent to their landlord.

New Claims

Universal Credit is assessed monthly and paid monthly in arrears. The first payment will usually be received 1 month and 14 days after the tenants submit their claim

Rent Arrears

If a tenant is unable or indeed unwilling to resolve a payment issue putting them in arrears and consequently in a position which would result in eviction action, the Department of Work & Pensions (DWP) can assist landlords/agents by considering if a managed payment to the landlords/agents (Alternative Payment Arrangement) is appropriate. Landlords/agents would follow the usual rent collection practices but when arrears reach the equivalent of one month’s rent, the DWP will review the situation following notification from the tenant or the landlords/agents. At this point the DWP can offer the tenant budgeting support and may decide to pay the rent directly to the landlords/agents. When the arrears reach two months’ rent the landlords/agents (or the tenant) can ask DWP to consider if an Alternative Payment Arrangement would be an appropriate course of action. The Landlords/agents can notify DWP at either the one or two month stage, by using the online Universal Credit: Rent Arrears Form.

Rent paid directly to the Landlord

The DWP can make an Alternative Payment Arrangement direct to the landlords/agents, to cover the rent following the information submitted by the landlords/agents (or tenant) where it is clear that the tenant needs support with budgeting.

Rent arrears can be recovered from tenants through a deduction to their Universal Credit

Arrears of rent and service charges for the property the tenant is currently living in are included in the list of deductions that can be made from a Universal Credit payment. The maximum rate at which deductions for rent arrears can be made is 20%. The rate used will depend on the claimant’s circumstances. Landlords/agents can contact the Universal Credit Service Centre by calling 0345 600 0723 to request a ‘third party deduction’ for rent arrears when they reach the equivalent of two months’ rent

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