Landlord offers 'budgeting accounts' ahead of Universal Credit

Published by 24publishing for 24dash.com in Housing and also in Central Government, Communities, Local Government, Universal Credit

Walsall’s largest housing association, whg, is signing tenants up to new budgeting accounts – offered through its local credit union – ahead of Universal Credit next year.

From next October, council and housing association tenants will see their housing benefit – alongside several other income-related benefits – rolled into a single Universal Credit paid to them directly every month.

The budgeting accounts were set up by Walsall-based credit union, Walsave, two years ago for private rented sector (PRS) tenants receiving local housing allowance (LHA).

They offer a way for landlords to safeguard income and allow tenants to ensure their rent is paid on time.

Walsave, which has around 7,000 members, works with some 500 private landlords and offers two types of account: a rent payment account – allowing tenants to have their LHA paid in and transferred straight to their landlord – which costs tenants £1.50 per transaction.

It also offers a budgeting account – which allows customers to have their benefits paid in and ring fenced for bills such as rent – which costs a flat rate of 75p per week.

The accounts have proved so popular that private landlords in the area now insist tenants are signed up to Walsave, and, as a result, are “actively seeking tenants on housing benefit”.

The biggest housing association in the area, whg, is offering the budgeting accounts to its tenants and is covering the cost of them, £18, for the first year – which includes the membership fee.

Ann Lote, manager at Walsave, said: “Private landlords now take on tenants on the agreement they have a Walsave account. We have noticed they’ll now seek housing benefit claimants. Members pay a £5 membership fee, which is the only membership fee they’ll pay.

“Before, they’d never contemplate taking on benefit claimants. It has made such a difference. It’s still ultimately a choice for the tenant and we will sit down with them to make sure that is what they want.”

The self-funded credit union was originally set up 14 years ago with a grant from the council and has now expanded to offer low-cost lending.

However, the accounts aren’t just for those on low incomes.

“We have got payrolls from whg, the NHS and the council and we have chief executives who are members with us,” says Lote. “People earning quite a decent amount of money use our budgeting accounts as well as those working their hardest just to keep their heads above water.

“We still have to cover our costs – admin and banking charges to set up these accounts. We use the co-op bank because it’s ethical and works on similar lines as we do.”

Typically, a budgeting account will see a tenant have their benefits paid in, then the bill payments, such as rent, gas and water are paid out straight away leaving a discretionary amount that is put onto a pre-paid card. This can be used to make online purchases or cash withdrawals from ATMs, but it can’t go overdrawn.

“We can also set it up so it puts a regular weekly amount on the card,” says Lote.

Jaz Kaur, housing services manager at whg, said: “In the last financial year we have had 62 accounts go through. We promote them on the rent statements and in the newsletters.

"We know there are major changes to the benefits system ahead so we want to help people maintain homes and safeguard our income. For us it acts as reassurance.

“New tenants from September will have direct debit as part of the condition of their tenancies.”

Mark Causer, technical specialist whg – who is in charge of communicating the welfare changes to tenants - said: “The ideal for us would be for everyone who hasn’t got a direct debit account arrangement to get a Walsave account. Because we have put the direct debit preference in the tenancy agreement we’d like everyone not catered for to have this account.”

One of the trends reported by whg is arrears rising during school holidays and Christmas.

To counter this, Walsave offers customers low-cost loans, helping them to bridge the gap and preventing them from turning to loan sharks.

“We offer between £30 to £10,000 if they want, spread between eight weeks of five years,” says Lote. “If they can’t pay it back we’ll give them a manageable sum. It has to be affordable and we do checks on that. We also do special bridging loans – up to £300 for loans on school uniforms for families and Christmas loans, e.g. £500 over 10 months. We also ask members to save alongside the loan so when it is cleared they’ll have some savings.”

Whg has put together a communications strategy for informing tenants of benefit changes. “We’re definitely off the ground,” says Kaur. “The foundation is set, now we’re going to be building.”

Pictured: whg's new head office in Hatherton Street, Walsall