Universal Credit Update!

Date Published 13 June 2013

It has been announced that the controversial Universal Credit, which is to be launched this autumn, plans will no include a mechanism for landlords to request direct payment of rent if arrears are accrued.

This mechanism will mean that landlords who are owed rent by tenants receiving housing benefit will be able to request direct payment from the Department of Work and Pensions (DWP).

Such a request will only be an option if a certain level of arrears has been accrued by the tenant, though the exact level has yet to be decided.

Upon receiving the landlord's request, the DWP will automatically begin docking Universal Credit so that arrears can be recovered.

Under current law only 5% of the benefits received by the tenant can be deducted for arrears. The Government has also announced it will be reconsidering this and whether the proportion should be increased.

Though Universal Credit has been criticised, it will be very similar to the current Local Housing Allowance in that the tenant will be receive the money, not the private landlord.

What has changed is that social landlords will no longer receive the rent directly, rather it will be paid via the tenants.

Many housing associations who are piloting the new system have already complained of increased rent arrears. These current trials, due to end after a year, will continue for 18 months.

These trials will determine exactly what level of arrears will have to be accrued before private and social landlords can make the request to the DWP for direct payment.

The current trigger for this request in the Local Housing Allowance and the pathfinder trial in Manchester is two months.

source: arla.co.uk