The roll-out of Universal Credit represents a huge shake-up of the country’s benefits system. Much has been reported in the media about problems experienced by some vulnerable claimants; less so about the potential fall-out for landlords.
However, a survey by the Residential Landlords Association showed that 38% of landlords renting to tenants receiving Universal Credit had seen them fall into rent arrears in the past 12 months, with tenants owing an average of £1,600.
The RLA is offering courses around the country to help landlords understand and prepare for the changes, with special discounts for its members. Meanwhile, we have produced the following guide to Universal Credit for landlords.
What is Universal Credit?
Universal Credit is paid to people out of work or on a low income, and combines various other benefits, including Housing Benefit, in one monthly sum.
By the end of 2018, UC will have rolled out to every area in Great Britain and, by 2022, it is due to replace all existing means-tested benefits.
What are the differences between Universal Credit and Housing Benefit?
The main difference is that claimants receive all their benefits in one lump sum, and are responsible for budgeting for their rent.
Housing Benefit is administered locally by the relevant council.
Universal Credit must be claimed online, and the claimant and the work coach communicate primarily through the online journal.
Universal Credit is paid by default to the claimant although, in some circumstances, it can be paid direct to the landlord.
Where both members of a couple are entitled to UC, it is paid jointly into a single bank account.
What are the potential problems for landlords?
Universal Credit is paid monthly, in arrears, so tenants claiming for the first time could wait up to five weeks before they receive their first payment and can pay their rent.
Tenants unused to budgeting may struggle to put aside enough money for their rent.
UC is designed to be claimed online; tenants may not be computer savvy, or may have no access to the internet.
Tenants are responsible for reporting any changes to circumstances – eg a new job – to DWP immediately to avoid overpayment. If they fail to do so, they could face a £50 admin fee.
Claimants can experience sanctions if they don’t fulfil their commitments – eg applying for jobs or accepting jobs offered. This means their benefits are reduced or stopped, making them unable to pay their rent.
Some landlords are reporting that councils and the DWP will not communicate with them, as all dealings must be done with the claimant due to data protection rules.
Helplines and support agencies are swamped with requests so help is proving difficult to find.
How can landlords prepare?
Although aimed at claimants, the government’s guide, Universal Credit and You can help landlords familiarise themselves with how the new system works, understand the problems claimants may face, and potentially help tenants with their claim.
Landlords can also talk to tenants to discuss their needs and help them understand their responsibilities regarding rent payments. Landlords can suggest the tenant sets up a standing order to pay their rent monthly.
What can a landlord do if a tenant on UC is in arrears?
If a tenant owes at least two months’ rent, the landlord may request an “alternative payment arrangement” or “managed payment” directly to them. The landlord should complete a form which can be found the government website.
How can landlords help tenants?
Helping tenants to meet their payments will save landlords money in the long run, as they are less likely to need to start potentially costly eviction proceedings. Here are a few ways landlords can make it easier for tenants to meet their rental payments:
Landlords can set the rental payment date, so it falls just after the UC payment is received.
Landlords can advise new claimants to request an advance payment if they are unable to manage until their first UC payment comes through.
If a tenant is in arrears, or have difficulty budgeting, the landlord can suggest that tenants request that their rent be paid direct. They should speak to their work coach at Jobcentre Plus or call the Universal Credit helpline on 0800 328 9344 if they manage their account by phone or on 0800 328 5644 if they manage their claim online. The decision is made by the Jobcentre, who may refuse the request and offer budgeting support instead.
If the Jobcentre refuses a request for an alternative payment arrangement (ie paying the housing section of UC direct to the landlord), the landlord could suggest the tenant sets up a credit union (or “friendly society”) account for the Universal Credit to be paid into, and a monthly standing order from this account to the landlord.
Can landlords simply choose not let to people on benefits?
A recent case highlighted the problems facing tenants on benefits. A lettings agency admitted discrimination on equality grounds after refusing to let to single mother Rosie Keogh because she was on state benefits, despite her 11-year record of paying rent in full.
Ms Keogh argued successfully that because single women are more likely to claim housing benefit than men, a ban on tenants receiving benefits indirectly discriminated against women. The case was settled out of court so provides no legal precedent, but highlights the fact that each potential tenant should be considered on their own merit.
If a landlord rejects a tenant on benefits in favour of one who is not, they must be prepared to provide evidence that they have used a fair and objective system of assessment.
For more on the roll out of universal credit, visit the government website.
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