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December 18

2018
by Amy Kraven
Universal Credit FAQ for landlords – how can you support your tenants?

Universal Credit (UC) is rolling out across the country, bringing with it some major changes as to how tenants on benefits pay their rents. There has been a lot of media coverage around this issue, including calls to scrap direct payments as rent arrears have increased for UC claimants. Panorama recently revealed in, ‘The Universal credit Crisis’ that the average rent arrears for UC claimants across the UK stands at £663 compared to £263 under the old system, nearly two and a half times more.

To minimise problems over late rent payments, here we share some advice from Families Minister Justin Tomlinson, with some Universal Credit tips for landlords.

“I understand that Universal Credit has felt like a huge cultural change for many private landlords, their staff and tenants,” acknowledges Mr Tomlinson.

“Rent is now paid directly to tenants rather than landlords. While everyone adjusts to the new system, I want to provide some simple pointers for landlords to help support their tenants through the process.”

Here is his advice for landlords with tenants on Universal Credit:

What has changed for tenants under Universal Credit?

Under the old system, housing allowance was paid direct to councils or private landlords. Now, in order to mirror the world of work and encourage people to be more independent, UC payments are made direct to claimants.

How is Universal Credit paid?

For most tenants, their payment will go in to a bank account a month in arrears. The payment includes rent and service charges.

How will landlords collect their rent?

Landlords need to speak to tenants receiving UC to arrange how and when rents are paid.

What happens if a tenant doesn’t pay their rent?

If a tenant is in arrears, property owners can ask the Department of Work and Pensions to pay rent directly as a Managed Payment To Landlord.  Tenants can also ask for the DWP to pay a landlord directly as an Alternative Payment Arrangement.

Asking for a Universal Credit advance

Tenants who can’t wait for their first Universal Credit payment can apply for an advance to help with rent payments.

Claimants can get up to a 100 per cent advance payment right from the start of their claim, and on the same day if needed. They can pay this back over 12 months.

What else can landlords do to minimise problems over late rent payments?

Given that there has been a high degree of confusion over what many perceive to be the increasing complexity of the UC scheme, Mr Tomlinson’s advice is welcome. The main criticisms of the scheme have been around the issue of direct payments to claimants and the complexity of the scheme.

How can landlords help their tenants with the issue of direct payments?

Many industry experts have suggested that a high proportion of tenants do not want direct payments because they openly admit they are not good at budgeting. The recent Panorama programme echoed this view. Paul Shamplina, Brand Ambassador for Hamilton Fraser, scheme administrator of mydeposits, adds:

“At present, direct payments to landlords are only considered in certain crisis situations. This needs to change and tenants and landlords need the option to have the housing element paid direct to the landlord.”

What the future holds is not yet known, but if your tenant is concerned about budgeting, you can signpost them to our financial guidance hub, MoneyWorks, which contains lots of advice to support tenants with budgeting. You can also provide them with the link to the government’s ‘Universal Credit: detailed information for claimants’ and more specifically relating to housing, the link to ‘Moving from housing benefit to Universal Credit’.

Tenants can also ask for Managed Payments if they have rent arrears or find it hard to budget because of other factors such as a learning disability, mental health condition or severe debt.

What can landlords do to support tenants who find the scheme confusing?

Alok Sharma, Minister of State for Employment, argues that UC is working well, acknowledging that there have been lessons learned along the way but that “what we have is a simpler system which people understand and ultimately makes sure they get into work fast, stay in work longer and earn more.”

However, Mick Roberts, who has been a private landlord for more than 20 years, feels that the housing element of UC is still too complicated. He says, “UC has to be applied for online. My tenant doesn’t even know how to go online. They are not coming out to see the people at ground level. If they spoke to the tenants that are affected by this, as I have, they would realise.”

If your tenants are not online or find the system confusing, provide them with a hard copy of ‘Universal Credit and You’. Since UC is designed to be claimed online, if tenants don’t have access to the internet or are not confident using a computer, the government advises that the jobcentre can tell them about local services that can help.

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