The introduction of Universal Credit has been a hot topic for the various landlord forums over the past few months. Universal Credit is replacing the myriad of benefits currently available and replacing it with one single all-encompassing payment.
This Universal Credit payment will incorporate the current system of payment of various benefits including Housing Benefit, Job Seekers Allowance, Employment Support Allowance and Tax Credits.
The new payment will be made monthly in arrears, the ideology behind this significant change being that it will make transition to work easier for the claimant of the benefit, as it will replicate a salary payment.
How does this affect private Landlords?
In terms of rent and rental allowance, private sector tenants will either receive payment at the Local Housing Allowance rate, which can be found here, or their rent whichever is the lower amount. This will however not be made as a separate payment but incorporated into their Universal Credit Payment.
The Universal credit changes will potentially have the biggest impact on those who currently receive payments directly from the Local Authority, as Universal Credit payments will be made directly to the claimant and they will need to manage their own rental payments.
For tenants who currently manage their own payments upon receipt of Housing Benefit there will be slightly differing challenges. These challenges will arise from the change of date they receive their payment, and the impact this may have on their individual cash flow.
What can landlords do?
Firstly, landlords should be aware of when the Universal credit will be rolled out in their area. You can check this here:
Secondly, you should engage with your tenants to ensure they understand the importance of paying their rent and that they are aware of the changes. You should also ensure that they have a bank account in which to receive payments and have knowledge of the new benefits system. This can be easier said than done if you are dealing with a vulnerable tenant or a tenant for whom English is not their first language.
What should landlords look out for?
The controversy is mostly from claimants, as there has been a lot of press around waiting times for claimants, and tenants being left in rental arrears with debt building up. This in turn has impacted on private landlords.
Landlords should ensure they stay in regular contact if a tenant is late in paying their rent. The government have put in place a number of safeguards to help tenants manage their finances, a guide to which can be found here. However it is expected that most claimants will manage the transition to the new system seamlessly, which may be somewhat optimistic.
It’s worth bearing in mind that this is a huge overhaul of the current system and will take some time to get used to. There will be teething issues and if you experience major difficulties then it will be worth getting in touch with your National partnership team contact. Details of these can be found here.
David is an authorised High Court Enforcement Officer and our Director of Corporate Governance