Landlords prepare for Universal Credit with direct debit switch

Published by 24publishing for allpay Limited in Housing and also in Bill Payments, Local Government, Universal Credit

Five UK-based social landlords have revealed the reasoning behind their decision to outsource their direct debits to payment specialists allpay ahead of Universal Credit – with all revealing that being able to offer residents rent collection on any date of the month was a key factor.

This October marks the introduction of Universal Credit which will see six benefits – including housing benefit – paid directly to claimants in a single monthly payment.

The current stance from the Department for Work and Pensions (DWP) is to pay Universal Credit one month from the date of the claim – with the claimant’s pay date fixed at no more than seven days after the end of their initial assessment period.

This has led landlords to ensure their current direct debit systems offer any date of the month collection so they can offer residents claiming housing support within Universal Credit a collection date soon after they receive their monthly payment.

Five landlords who recently outsourced their direct debits to allpay revealed that this condition was one of the biggest drivers in their decision to use allpay.

The company works with nearly 75% of the top 400 UK social landlords providing the full suite of payment options, allowing residents to pay their rent through both of the major cash networks, PayPoint and Post Office®; with a debit or credit card over the phone or via the internet or through a smartphone using the allpay Payment App.

It also collects direct debits for some of the UK’s biggest housing associations.

However, it’s seeing many more enquiries about its service ahead of Universal Credit because of the every date of the month collection it can offer.

Paragon Community Housing Group, which manages 9,000 homes across London and Surrey, currently receives around 50 per cent of its income through housing benefit which is paid to it directly.

Thurle Phillips, applications manager and Esther Clarson, housing manager at Paragon said: "We were keen to get a head start on the impact of welfare reform. The decision to use allpay for direct debits was about being able to offer our residents a direct debit service on any date of the month, in reflection of Universal Credit also being paid to recipients on any date of the month. This service has the potential to reduce arrears because direct debits can be aligned to when a resident receives Universal Credit. Starting this process now has enabled us to prepare for the effects of Universal Credit (from October 2013), whilst having time to embed the new system into our internal process."

They said that using allpay for direct debits "would illustrate value for money and would allow us to be proactive". They said: "It meant the introduction of a new ‘any date’ system quickly, allowing our residents flexibility. We now have greater tools to tackle our arrears and help mitigate risk."

They also believe having everyday flexibility will lessen the risk of residents incurring banking charges. "We believe that having everyday flexibility will lessen that risk because people can choose when to have rent collected," they said.

Sophie Bates, housing services manager at Freebridge Community Housing, said that the manpower and additional software needed to upgrade its current system to increase the number of payment dates it offered made it financially prohibitive.

She said: "So far we’ve found the allpay system, (and associated Callpay system), very user friendly and because of this more of our staff are able to set up direct debits than ever before, particularly useful given that this is the method of payment we encourage our customers to use."

Other landlords who have recently chosen allpay to manage their direct debits  include north east ALMO Your Homes Newcastle, Muir Group and Thames Valley Housing. Find out why they opted for allpay.

allpay will be exhibiting at this year's National Housing Federation (NHF) finance conference in Warwick on the 20-21 March. You can find us at stand 92.