Saturday, 28 March 2015

Direct payments dropped if tenant in arrears

Housing benefit payments will be switched to landlords if tenants fall into arrears once the universal credit is introduced.

Welfare minister Lord Freud unveiled the move at the National Housing Federation’s annual conference today, and announced a series of demonstration projects that will test how the new approach will work.

Universal credit, which will combine various welfare payments including housing benefit into one sum, will be paid direct to tenants. At present many tenants have their housing benefit paid to their landlords, and there have been concerns in the housing sector that the switch to universal credit could result in an increase in arrears.

Lord Freud acknowledged the concerns, but said the government is committed to making direct payments to tenants the default position. ‘I remain absolutely convinced that there are mechanisms available that will allow us to introduce a single universal credit while also providing protection for the housing sector,’ he said.

He called for housing associations and local authorities to volunteer for ‘half a dozen’ demonstration projects that will assess how this can be achieved. A key element of these will be a ‘trigger’ that switches payments from tenants to landlords if arrears mount up.

Lord Freud said government research suggests receiving housing welfare payments direct will be entirely new for only around 20 per cent of tenants, and the demonstration projects will evaluate how best to support this group. Direct payment will be introduced for new tenants from 2013, then phased in for existing tenants.

David Orr, chief executive of the National Housing Federation, called on the government to go further. ‘Why not give people the choice to ask to have their rent paid direct to their landlord,’ he asked.

‘Retake the opportunity for individual tenants to choose to have their rent paid direct, then we will be with you all the way.’

In numbers: who will be affected by direct payments?

The Department for Work and Pensions has analysed how tenants will be affected by its payment rules for the housing element of universal credit. Its figures break down as follows:

  • 35 per cent will be unaffected because they don’t claim housing benefit
  • 10 per cent are working age adults who already have experience of managing their housing costs
  • 10 per cent are working age adults who are deemed vulnerable and will continue to have their housing welfare payments made direct to their landlord
  • 25 per cent are pensioners, how their benefits are paid will not change
  • 20 per cent have their housing benefit paid to their landlord at present but will receive the money directly under the new system

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