The Independent has reported that the number of Universal Credit claimants in rent arrears is more than double than those still in receipt of Housing Benefit. Figures released under the Freedom of Information Act showed that claimants receiving Universal Credit had average rent arrears of £662.56, compared with £262.50 for claimant receiving Housing Benefit.
One of the reasons for the increase in rent arrears is that Housing Benefit used to be paid directly to the landlord, but under Universal Credit rules, benefit payments are paid directly to the tenant.
So what can we do to prevent rent arrears?
Alternative Payment Arrangements (APAs)
APAs Managed Payment enables landlords to apply for the Housing Costs Elements (HCE) of Universal Credit to be paid directly to them where the tenant has rent arrears or is vulnerable. The Department for Work and Pensions have discretion to refuse an application for direct payments and will only do so if it is in the best interests of the tenant and can end at any time.
The amount of HCE awarded will depend on the amount the tenant is eligible to claim under the Local Housing Allowance and so it may not cover the full rent. Where the award for Universal Credit falls below the HCE, landlords will only receive the award. This may cause difficulties where tenants return back to work and the Universal Credit award is decreased in accordance with the tenants ‘cut-off, which could result in no award being made.
Issues also arise where benefits are capped for households with three or more children. Some families may be exempt from the benefit cap if they meet one of the qualifying conditions of the Universal Credit Regulations (Regulations 82 & 83).
Discretionary Housing Payments
Discretionary Housing Payments are freestanding payment made by the local authority to help people who need extra help to pay their rent. To be eligible to claim the tenant must be in receipt of Housing Benefit or Universal Credit and require help with housing costs. This may include help to pay arrears, deposits for a home or rent in advance.
The amount of money available for Discretionary Housing Payments depends on each local authority’s annual cash limits. Local authorities are reporting that their cash limits are running low and are reducing the amount of discretionary funds being paid to landlords. For applications to be successful, landlords must demonstrate to the local authority that the tenant is likely to suffer hardship it the payment is not made.
How we can help
Our team of experts can provide advice on matters ranging from advice on recovering rent arrears, full management of Universal Credit and Housing Benefit claims, challenging overpayments of benefits, maximising rental income, overcoming benefit caps and much more.
Our rent management programme gives you, the landlord, peace of mind in knowing your tenants will receive full support and representation on all debt related matters should they fall behind on their rental commitments.