Direct Payment Of Universal Credit Can Be Made To Landlords with Tenants in Arrears

Direct Payment Of Universal Credit Can Be Made To Landlords with Tenants in Arrears

The Government’s change of policy will now allow automatic direct payments of housing benefit to landlords providing the tenant is more than 8 weeks in arrears.

The government rethink has been welcomed by the Residential Landlords’ Association (RLA) and all UK landlords who house tenants in receipt of housing benefit.

Yesterday was the day the Government’s first flagship universal credit pilot scheme went live in Ashton-under-Lyne, Greater Manchester, and a circular to all housing benefit staff revealed that automatic direct payments to landlords will now be allowed in the pathfinder areas.

The policy change was tucked away on the last page of an obscure circular published by the Department of Works and Pensions (DWP) yesterday. Universal credit expert and RLA trainer, Bill Irvine, spotted it and immediately informed the RLA.

The circular states, “Landlords can refer rent arrears cases to Universal Credit; those which are under 2 months rent will trigger Universal Credit to contact the claimant to discuss their non payment as part of the Personal Budgeting Support process, where as those with over 2 months arrears will be switched to direct rent payment automatically and relevant budgeting support activity arranged subsequently.”

The news that direct benefit payments to landlords will now be triggered automatically following two months of arrears represents a welcome change in policy by the coalition Government, which had previously insisted that direct payments to landlords would only be allowed in exceptional circumstances and even then not automatically.

Richard Jones, policy director of the RLA, commented, “The RLA welcomes this new guidance to DWP staff, which represents a significant step-change in attitude by Government; and, for the first time publicly acknowledges that direct payments to landlords are a crucial component of any welfare reform process. However, Government promises of automatic direct payments do not yet extend to the national roll-out of universal credit later this year, and we are eager to ensure that it will apply when this happens. At the same time, the RLA will continue lobbying for a shorter time period in which automatic payments can be triggered, and for more details about the direct payments process. It is important for landlords to know that if tenants fall into arrears an immediate stop will placed on further payment of housing costs to the tenant until direct payments to the landlord have been established.”

Read the DWP circular ‘HB A13/2013′. The reference to universal credit payments can be found on page 16.

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