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Earlier this year, Caridon Landlord Solutions joined other industry experts in responding to the House of Lords Economic Affairs Committee’s inquiry into the economics of Universal Credit. Following this, a series of recommendations for an overhaul of Universal Credit have now been handed to the Department for Work and Pensions by the House of Lords Economic Affairs Committee.
Two of the key issues which Caridon Landlord Solutions raised were direct payments to landlords and the initial five-week wait, both of which have been addressed in the report.
Currently, Universal Credit claimants must wait five weeks for their first payment. Claimants are given the option of an Advance Payment if they do not think they will be able to manage financially, but this is expected to be repaid via future deductions to their Universal Credit.
The report acknowledges that the five-week wait is the primary cause of insecurity in Universal Credit and despite changes being made by DWP to mitigate the worst effects, these have fallen short of what is required. It has been suggested that the DWP should introduce a non-repayable, two-week initial grant to all claimants. For claimants moving from certain legacy benefits to Universal Credit, this grant could replace the existing system of run-ons. This would provide some security to claimants and would make repayments of advances more manageable.
Sherrelle Collman, Managing Director of Caridon Landlord Solutions, says: “The five-week wait is one of the greatest challenges for tenants. This proposal would certainly help tenants avoid having to take an Advance Payment and provide landlords with greater security that tenants are less likely to fall behind with rent in the first month.”
In relation to rent payments, Universal Credit includes a housing element to cover rent. It means that claimants must budget for accommodation costs in their benefit and pay rent themselves directly to their landlord.
Those that find this difficult are able to ask for an Alternative Payment Arrangement – where the rent is paid directly to their landlord before they get the remainder of their Universal Credit payment in their account. However, by this point, many tenants have already fallen into arrears. The report said that claimants should be given the choice, at the beginning of their claim and not when significant arrears have accrued, of having an Alternative Payment Arrangement.
Sherrelle Collman adds: “We have been calling for greater flexibility of direct payments to landlords for a long time. The way the current system works has clearly led to increased rent arrears and put tenants at greater risk of eviction. This is something that both landlords and tenants have called for.
It would not only give tenants greater support in managing their finances, but it would give landlords the confidence to let to those in receipt of Universal Credit without the concern that they will fall into rent arrears.”
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