Sunday, 29 March 2015

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.

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