Universal Credit: The crunch

How will Universal Credit impact me?

The Payments Council and Department for Work and Pensions (DWP) have estimated that 2.7million Universal Credit recipients will struggle with money management when the scheme is fully activated, and understandably this has left many landlords nervous that they will not receive their rent as a regular payment.

Currently, many landlords see tenants who receive benefits as a ‘safe bet’ as the benefits are paid to them by the council, and this payment can be more reliable than a private tenant – after all, the DWP are never going to be victims of redundancy, or a marital break-up!

Can my rent still be paid directly to me?

The idea of Universal Credit is that all benefits are paid in one lump sum, so in most cases it is encouraged for rent to be paid separately from the main payment.

However, there are exceptions to this rule.

If your tenant is having difficulty paying their rent, you as the landlord can apply for a Managed Payment to Landlord, which allows all or some of the housing costs to be paid directly to you, the landlord.

In order to process this request, you as the landlord will need to complete a UC47 form (which you can download here) which makes a request for the housing element of the payment to be paid directly to you.

The decision whether or not to grant this request will be made by the local Jobcentre. They will need to see evidence that your tenant will struggle to manage the payments of rent themselves, and would look for evidence that:

• The tenant/claimant is in arrears with their rent for an amount equal to, more than two months of their rent or

• A claimant has continually underpaid their rent over a period of time, and they have accrued arrears of an amount equal to or more than one month's rent.

Alternatively, your tenant can request for the housing element of their payment to be paid directly to you, their landlord if they believe they may have trouble paying their rent.

They are advised to be upfront with the team at their local Jobcentre if they believe that they will struggle to make rent payments, especially if they have a history of rent arrears, struggle with debt, have difficulties with drugs or alcohol or have any medical problems which may make allocating the funds difficult.

Is it being rolled out all over the country at once?

No.

The Department for Work and Pensions is rolling the scheme out gradually across the country, with plans to have in in place across the UK by September 2018. Full details of when it will be live in your area are available here.

However, it is important to remember that even when Universal Credit goes live in your area, it will only be recipients processing NEW CLAIMS who will benefitting from the new scheme. If you have an existing tenant who receives benefits, the way they receive their money will not change immediately, unless their circumstances do.

Can I ask a tenant outright if they receive Universal Credit?

If you want to ask this question, it is something that you will have to ask every single tenant that you meet!

From a legal standpoint, you are permitted to check if a potential tenant is receiving any benefits – in fact, it is advisable to have an understanding of how your tenant is intending to pay your rent on a regular basis!

Referencing should highlight if your tenant is receiving any benefits, but do remember that whilst Universal Credit is a payment which can be made to people who are unemployed, it can also be used as a ‘top-up’ payment, like tax credits, and will be paid to people who are working but may be receiving a low income.

Eventually, it will replace the following benefits:

• Income support
• Child tax credits
• Housing benefit
• Working tax credit
• Income-based Jobseekers Allowance
• Income-related employment and support allowance

Are there likely to be hiccups in switching people onto Universal Credit, and will this impact my rent?

It is estimated that many recipients of Universal Credit will be coming from work, so hopefully there won’t be many incidents of people being left with no money to see them through the month whilst their payments are being organised – a process which takes around six weeks. However, should this not be the case, there is a back -up plan to ensure that vital requirements – such as rent – can still be paid.

Claimants are able to ask for an advance payment in the first month of their claim, which will be a proportion of the full payment. This will then be recovered over a period of six to twelve months once their claim has been processed.

Once finalised, payments are paid monthly, and in arrears, similarly to most wages. The payment is assessed monthly.