The government has issued a landlords’ guide to Universal Credit to help them understand the process and procedure of the payment made either direct to tenants or alternatively to them.
Universal credit payments are a single payment made up of an aggregate of different benefits including those dealing with housing costs such as rent. In order to qualify tenants, need to satisfy 3 conditions, payment, liability and occupation. This means that tenants will need to prove what their rent liability is by providing for example a copy of their tenancy agreement. Landlords will also be asked to provide paperwork to assist with any claim where a tenant is unable to provide the necessary paperwork or if there is some anomaly in the tenant’s paperwork. Universal credit is designed to be claimed online and is paid monthly in arrears 5 weeks after it is applied for.
The universal credit payment will usually be made direct to tenants who will need to arrange their own rent payment. Given the payment can take at least 5 weeks to be approved landlords will need to be prepared for any delayed rental payment. Some tenants can claim for an advance payment to prevent any rent arrears however such a payment is not guaranteed and will need to be processed before approved and paid.
Where there are rent arrears a landlord will be entitled to request that the universal credit payment in respect of the tenant’s housing is paid direct to them. However, the guide states that such applications will be decided on a case by case basis so little guidance is offered on when to exactly apply. If landlords believe that tenants are unable to manage their financial affairs, they can communicate this to the Department of Works and Pensions (DWP) who manage universal credit payments.
Should a tenant move to another property, landlords receiving payments directly in respect of any rent arrears will no longer be eligible for those payments. Equally, landlords who receive more rent than they are entitled to because of, for example, a failure to advise the DWP of a change in the tenant’s circumstances, may be expected to repay the overpaid benefit.
In order to qualify for rent arrears payments, landlords will need to prove that the tenant is in at least 2 months’ rent arrears. Furthermore, landlords will only be entitled to a deduction of up to 20% of the total universal credit payment the tenant receives as payment towards the rent arrears every 28 days in arrears. This percentage rate will vary from tenant to tenant on a case by case basis.
This guide is clearly aimed at helping landlords understand the new universal credit system. Landlords appear to be encouraged to have a proactive role in the tenants benefit entitlement which can benefit both parties who should maintain a good relationship throughout.