Friday, 25 July 2014

Universal credit docked to recover rent arrears

A mechanism to automatically recover rent arrears is to be introduced alongside the direct payment of housing benefit to tenants.

Details released by the government last week explain that under its universal credit reform landlords will be able to contact the Department for Work and Pensions to request benefits designed to cover housing costs are paid to them once a prescribed level of rent arrears is reached.

At this point the department will also start to recover the arrears by docking universal credit payments.

In its response to a communities and local government select committee report on the implementation of universal credit, the government says deductions can be up to 5 per cent under existing laws, but it ‘is considering whether this level is appropriate for universal credit, or if it should be increased in the future’.

Under universal credit, which is being rolled out widely from the autumn, a range of benefits including housing benefit will be combined into a single monthly payment. This will mean many social housing tenants receive benefits intended to cover their rent payments themselves, instead of the money going direct to their landlord.

In its original report, published in April, the select committee raised concerns about direct payment under universal credit, saying housing associations could face ‘increased rent arrears and collection costs’.

In its response to the report the Communities and Local Government department says the government is committed to the move to direct payment of housing benefit, but it also want to ensure universal credit is introduced ‘in a way that protects the finances of social landlords’.

The government is running six pilot projects to assess the impact of direct payment of housing benefit, and recently announced these will be extended from a year to 18 months to allow it to look more closely at the protection that is needed for landlords and tenants.

This includes calculating what level of arrears should trigger a switch in benefit payments from tenants to the landlord. The first full universal credit pathfinder, which launched in Greater Manchester at the end of April, is using two months of arrears as the trigger point, however a final decision on the threshold to be used for the national roll out will be made after the direct payment pilots have been evaluated.

Readers' comments (39)

  • Melvin Bone


    Genius I don't think.

    I'm not certain that UC needed another level.

    I'm sure that tenants in dispute with their landlords will be pleased...

    This car crash of a benefit is getting bigger all the time...

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  • Rick Campbell

    If my understanding is correct, up to 40% deductions can be made.

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  • michael barratt

    On a day that new changes to disability benefits have been introduced and a charity warns the changes will see almost a fifth of disabled claimants (600,000 people) losing their benefits. The Government announces that rent arrears including the bedroom tax can be deducted from what the sick and vulnerable have left for food. Absolutely disgusting and shameful, how could anyone look themselves in the mirror and vote Tory or LibDem, especially the latter, who hypocritically claim the high ground and have a social conscience.

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  • If the pilots are to be extended in duration, does this mean that:

    The introduction of UC will be delayed

    OR

    UC will be introduced before the pilots are finished (thus perhaps calling into question the point of the pilots...)

    Michael perhaps needs to add New Labour to the Tories and LibDems. After all, it is now clear that nothing would change if Milibrain and his crew roll up to the door of No10 after the next election. Whither welfare, the NHS, universal education, manufacturing, secure housing, aspiration, hope...

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  • Melvin Bone


    'Absolutely disgusting and shameful, how could anyone look themselves in the mirror and vote Tory or LibDem'

    Or you can vote Labour and get your pension capped and your universal pension age benefits stolen.

    I think the Monster Raving Loonies may get in this time..

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  • Daniel Sweeney

    Melvin, we can only hope.

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  • This government are not protecting the vulnerable at all. HAs must speak out - about keeping rents low for the vulnerable and low waged and about taking care of people. There is no credible politician to do it. HAs need to speak up loudly about these things. It's clear the government agenda is destroying lives.

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  • Whilst this be a welcome measure of recovery for landlords, vulnerable LHA tenants will be hit when they are already down.

    Far more simple and fair to the landlord/taxpayer/tenant to pay the LHA element of UC directly to the landlord if both parties agree to this when they first sign a tenancy agreement.

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  • Meanwhile the income is getting lower, impossible to get even with bills and living expenses.

    I hope that have a rethink here somewhere.

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  • This entire scheme should be scrapped,and a no confidence vote should be initiated against this government immediately.

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