By On 1st November 2018, the Department for Work and Pensions (DWP) published their latest newsletter for landlords regarding updates to Universal Credit.
This newsletter covers the latest changes to the scheme, which includes a large area of topics that are key to landlords letting their property to tenants who claim Universal Credit benefit payments.
As Universal Credit continues to be introduced across the nation, landlords in the private rental sector will need to understand how Universal Credit works when this new benefits system is introduced in their local area. Landlords can also view an updated list on the specific job centres currently accepting Universal Credit to see if they are in operation in their area in order to better prepare themselves.
This recent update follows the DWP’s announcement in October, detailing the new telephone system put in place to allow landlord’s to contact a claimant’s Case Manager directly, provided that their tenant has granted ‘explicit consent’ for them to contact DWP on their behalf.
This system was put in place to help reduce long waiting times and help maintain consistency when contacting DWP over Universal Credit queries. It also enables landlords and tenants to speak directly to the tenant’s Case Manager to make the process more efficient and less confusing.
How will private landlords be affected?
According to the November DWP newsletter to landlords, one of the changes to Universal Credit includes the updates to the Alternative Payment Arrangements (APA) UC47 forms.
These forms are what landlords are required to complete when they apply for a managed payment to landlord (MPTL), in the event that their tenant claiming Universal Credit is at risk of falling behind on their rent payments or is already in arrears of two months or more.
The new changes to the UC47 forms include a section for landlords to input their contact email address and phone number so that Universal Credit can liaise with them directly if required. This is designed to help landlords speed up their MPTL application process and start receiving rent payments or rent arrears debt repayments from Universal Credit.
DWP has also created a new online process for landlords submitting an APA UC47 form to further streamline the procedure. This provides a method for all private landlords that currently aren’t on the government’s landlord portal to request a managed payment to cover their tenants rent payments.
Landlord’s concerns over Universal Credit
In the past, there have been several criticisms of Universal Credit that include long waiting times to receive rent payments from tenants under the new benefits system compared to the previous method.
Prior to Universal Credit, private landlords letting to tenants claiming Housing Benefits would receive their rent payments directly from the local council. Under Universal credit, however, the tenant claiming benefits is responsible for paying their rent directly to their landlord, which has led to delays in landlords receiving the rent payments on various occasions.
On average, Universal Credit payments take five weeks to be received by the tenant. Following this, the tenant needs to arrange for the rent payments to be sent to their landlord; contributing to the overall length of time it takes for the landlord to ultimately receive their rent payments. And that’s assuming that there are no delays or administrative errors during the claimant’s Universal Credit application process.
This has put many landlords under increased financial pressure to keep up with their buy-to-let mortgage repayments and has caused many to simply refuse to let their properties to tenants claiming Universal Credit and other housing benefits.
According to a recent survey carried out in October 2018 by the Residential Landlord Association (RLA), 61 per cent of landlords letting to tenants on Universal Credit experienced their UC tenants fall behind on their rent over the past year. This is more than double the proportion of landlords (27 per cent) who experienced this issue in 2016.
Furthermore, the survey found that the average amount of rent owed by Universal Credit tenants in their rent arrears had increased by 49 per cent to £2,390.19 when compared to 2017, when the amount was £1,600.88.
The survey results also indicated that Universal Credit tenants are more likely to become homeless with 28 per cent of landlords having evicted Universal Credit tenants in 2018, with 77 per cent of the surveyed landlords stating their reason for doing so was rent arrears.
In light of these worrying statistics, the RLA has since advised their landlords to start building positive relationships with their tenants as soon as possible. This is to prepare for the increase of tenants on qualifying ‘legacy’ benefits that are soon to be migrated over to Universal Credit as well as tenants currently in full-service Universal Credit locations.
The aim here is to enable both parties to better manage the Universal Credit system so that landlords can receive their rent payments on time.
It’s clear that there is a long way to go until Universal Credit benefits both tenant claimants and private landlords, and any effort to support the process from DWP is surely welcomed in order to help reduce the financial risk of letting to these tenants from the private landlord’s perspective and to help those tenants on benefits into secure housing.
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