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Universal Credit and Landlords

Universal Credit and Landlords

The press is full of stories about Universal Credit, and almost none of them are complimentary. Landlords with tenants, who either have been transferred to Universal Credit or who are due to be transferred, may be understandably worried. The official government line that most private sector landlords will be unaffected by the introduction of Universal Credit may be wearing a little thin, particularly with national figures suggesting that rent arrears are already on the rise.

What is Universal Credit?
It’s a single monthly payment for people who either are not working or whose income is below a certain level. This new single payment replaces six old benefits: Income Support, Child Tax Credit, Working Tax Credit, Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance, and Housing Benefit.

How does Universal Credit affect landlords?
Universal Credit is paid in arrears, directly to the recipient. The housing element differs from Housing Benefit in that it is no longer paid straight to the landlord. Under the new system, the obligation is on the tenant to meet their rental obligations using their Universal Credit payment. There is considerable concern in some quarters that not all tenants will find it easy to manage their money in such a way as to enable them to ensure that their rent is paid on time and in full.

This may be because their tenants could struggle with the “whole month rule”, in which claims are processed on a monthly basis, rather than weekly. The backdating of claims, the recovery of overpayments and what happens when tenants split up or two households combine are also all likely to become live issues for many landlords.

Can a landlord apply for direct payment of the housing element of Universal Credit?
In theory, yes, provided a tenant has amassed two months or more of arrears. However, the process, which involves making an application to the DWP, currently lacks clarity and, at least initially, a landlord in this position may benefit from specialist advice.

Note that any direct payment to a landlord of the housing portion of Universal Credit is kept under review, as the DWP’s aim will be to return the claimant to the single monthly payment.

What is the situation in the local area?
Both Burnage and Stockport are “live service” areas for Universal Credit. This means that Universal Credit has not yet been rolled out to all claimants.

For the foreseeable future, landlords with tenants in receipt of Housing Benefit may have to accustom themselves to both the old and the new regimes. Although new claimants are likely to move straight onto Universal Credit, existing claimants may not move until as late as March 2022.

How can we help?
Our Landlord and Tenant team will be pleased to assist you with any queries relating to the housing portion of Universal Credit. Please contact Philip Walsh in the first instance by calling 0161 975 1900 or emailing p.walsh@cj-law.co.uk .