Universal Credit will be paid direct to landlords but ….

by Property118.com News Team

9:45 AM, 2nd May 2013
About 5 years ago

Universal Credit will be paid direct to landlords but ….

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Universal Credit will be paid direct to landlords but ….

Universal Credit will be paid direct to landlords but ....The Residential Landlords Associated revealed yesterday the housing benefit element of Universal Credit may well be paid directly to landlords after all. However, a lot of questions remain unanswered.

According to the RLA “automatic direct payments to landlords will now be allowed in the pathfinder areas. The policy change was tucked away on the last page of an obscure circular published by the Department of Works and Pensions (DWP) yesterday.”

The circular states, “Landlords can refer rent arrears cases to Universal Credit; those which are under 2 months rent will trigger Universal Credit to contact the claimant to discuss their non payment as part of the Personal Budgeting Support process, where as those with over 2 months arrears will be switched to direct rent payment automatically and relevant budgeting support activity arranged subsequently.”

What we don’t know yet is whether existing arrears will be taken into account. For the most part, landlords receiving direct payments of LHA up to now have done so on the basis that their tenants are already at least two months in arrears on their rents. Will the new rules take this into account? It would seem logical and fair that they would be but nobody seems to be able to provide a definitive answer.

The news realeased by the RLA is generally being celebrated as good news as this may well prevent some of the expected havoc. Many landlords, charities and other organisations have expressed concern that a lot of benefits claimants do not have the required budgeting skills to deal with a single monthly payment of benefits. Given that direct payments are generally only made to landlords now on the basis that tenants are already two months in arrears is very clear evidence on this.

Charities were concerned that landlords might evict all benefits tenants on the basis that the risk for them would be too great.

So has the train wreck of Universal Credit we have all be expecting been averted? Only time will tell.

Link to RLA article HERE



Comments

10:19 AM, 2nd May 2013
About 5 years ago

The question of 'clawback' presumably will still exist.
For a LL to ensure he isn't out of pocket will require 2 months rent as deposit and 1 month's rent in advance.
2 months of rent arrears will or should mean for advance rent payments; 1 month and 1 day equalling 2 months of rent arrears.
A HB LL now then wouldn't even need RGI if he has 2 months rent as deposit and i months advance rent.
1 month and 1 day of rent arrears and the rent will be paid direct.
Clawback is the issue though which would still put me off taking a HB tenant.
But this is good news and will assist HB tenants to source tenancies in the PRS.

23:20 PM, 2nd May 2013
About 5 years ago

A good analysis Paul but have you ever known a housing benefit tenant have three months rent available (1 as rent and 2 for deposit)? I find they struggle to get the 1+1 but if they can't I move on to the next applicant.

Clawback, at least under the current regime, is not really an issue as long as you inform the council of all circumstances in a timely manner. They can only claw back from the person providing the incorrect information. I have had a number of attempted clawbacks but the council always backs down when you let them know that you know how the rules work.

Even better, I have started using Tasker Payment Services (They operate like a Credit Union Account). The tenant has their benefit paid into a Tasker account and Tasker immediately pay it across to the Landlord for a fee of £3 per payment. I think that's the cheapest insurance you can get. Contact Leanne Tasker for more info (Just Google Tasker Payment Services)

23:27 PM, 2nd May 2013
About 5 years ago

Ray;
Yes I agree with your contentions
Which is why I don't take HB tenants as they can't meet my requirements!
Clawback is something I do NOT have the same confidence as you in.
I believe councils will try it on and you have to be a pretty savvy and knowledgeable LL to stop such clawback.
I am NOT one of those savvy and knowledgeable LL; I just CANNOT afford to take a risk.
Yes I know about and agree the TPS method is a good one.


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