Universal credit: DWP answers key questions on housing payments
Published by Jon Land for 24dash.com in Universal Credit and also in Bill Payments, Central Government, Housing, Local Government
Universal credit: DWP answers key questions on housing payments
The Department for Work and Pensions has published a new guide for social landlords to help them understand and plan for the direct payment of housing costs under universal credit.
Here are some of the key questions and answers, including details of telephone numbers that landlords can use for the new universal credit service centre:
What do landlords need to do to ensure that rent is paid?
A key aspect of Universal Credit is to encourage both personal responsibility and financial independence to help remove these as barriers into employment; therefore, where possible, claimants will be expected to arrange their own rent payments as they would if they were in full time work. Landlords need to think about how this will fit with their own payment calendars. If landlords have previously received a managed rent payment from the local authority, they will need to speak to their tenants to agree arrangements for collecting rent from them. In a minority of cases Alternative Payment Arrangements (APAs) can be put in place to support claimants.
Landlords may want to encourage tenants who do not have a bank account to open one. Having access to a transactional account will help claimants manage their rent payments through direct debits or standing orders.
When will a claimant get their first Universal Credit payment?
Universal Credit will be assessed monthly and will be paid monthly in arrears. A claimant will receive their first payment seven days after their initial assessment period has finished. For example, for an assessment period of 16 July to 15 August, the first payday will be 22 August. The claimant will then receive future payments on the 22nd day of each month.
If a claimant's payday falls on a weekend or a bank holiday, payment will be moved forward to the nearest working day.
If payments are made monthly, how will tenants pay their rent while they are waiting for their first payment of Universal Credit?
Many new claimants of Universal Credit will be coming from work and will be able to support themselves in the first month using their final payment of earnings. However, where needed, claimants will be able to ask for an advance in the first month of their claim to support them until their first payment is made. This will be a proportion of the full
payment and will be recovered over a period of time.
How will DWP check rent and tenancies under Universal Credit?
Where DWP decides that a check is needed, the claimant will be asked to provide evidence to support their Universal Credit claim.
If a tenant doesn’t have a copy of their tenancy aagreement, will DWP accept other evidence as proof of a tenancy (e.g. letter from landlord)?
DWP may accept a landlord letter confirming the current rent and service charge but the evidence required will vary on a case by case basis.
How will annual rent increases be dealt with under Universal Credit?
Claimants should tell DWP of any changes that might affect their Universal Credit payment, including rent increases. DWP is looking at whether it is possible to automatically gather rent information from local authorities and large registered providers of housing. Further details will be provided once they are available.
Some social landlords verify Housing Benefit claims for local authorities. Will this continue when Universal Credit is introduced?
There are currently no plans to ask landlords to check Universal Credit claims.
How will monthly rent be calculated if a claimant’s rent is paid weekly?
Universal Credit will be paid monthly. Weekly rents will be calculated using the following formula: weekly rent multiplied by 52 and divided by 12.
What about other payment frequencies, for example, four weekly?
Other payment frequencies will be calculated as follows:
• four-weekly payments are multiplied by 13 and divided by 12
• three-monthly payments are multiplied by four and divided by 12, and
• annual payments are divided by 12.
What will happen in 53 week years?
Universal Credit will always be calculated based on a 52-week year.
Some social landlords have rent free weeks – how will these be dealt with in Universal Credit?
If rent is charged over less than 52 weeks, the monthly payment will be worked out based on the number of weeks rent is charged for. For example, if rent is payable 48 weeks of the year, Universal Credit will be calculated as weekly rent multiplied by 48 and divided by 12.
Will service charges form part of Universal Credit and how will they be paid?
The eligible service charges will be paid directly to tenants as part of the housing costs element of Universal Credit.
Do landlords need to make their tenants aware what service charges are eligible/ineligible for Universal Credit?
Landlords in the social rented sector will be responsible for setting out clearly to the tenant allowable service charges. The claimant will report this as part of their claim. In the private rented sector, a tenant's total rent is usually made up of both rent and service charges, which are not separately identifiable. DWP will not need to collect separate service charge information for the private rented sector group as DWP will pay the lesser of the total rent or the appropriate Local Housing Allowance.
What happens if a tenant gets into arrears?
We would expect landlords to follow their usual rent collection practices. However, if the claimant is unable or unwilling to resolve payment issues, DWP will intervene.
Landlords should contact DWP on 0845 600 0723 when the tenant has accrued arrears to the value of one or two months rent.
• When arrears reach the equivalent of one month’s rent, DWP will review the situation following notification from the landlord. At this point DWP can offer the claimant budgeting support and may decide to pay the rent directly to the landlord.
• When arrears reach an equivalent of two month’s rent (the ‘trigger point’), an Alternative Payment Arrangement will be put in place to allow a managed payment to the landlord.
These measures will help to avoid the build up of excess levels of rent arrears and to reduce the risks to landlords.
Will any claimants have their rent paid directly to their landlord from the start of their claim?
Yes, when a claim for Universal Credit is made it will be decided if a claimant needs support with budgeting and this may include putting in place an Alternative Payment Arrangement where significant support needs are identified. In these cases DWP staff will consider information from tenants and landlords before taking a decision.
If a tenant is already in arrears when they make a claim for Universal Credit, will their rent be paid to the landlord from the start?
This will depend on the claimant’s circumstances. When a Universal Credit claim is made, DWP will work with the claimant and landlord to decide if budgeting support or Alternative Payment Arrangement is required, based on a number of factors. All cases will be looked at on an individual basis.
Under Local Housing Allowance, if a tenant currently gets a managed rent payment to their landlord, will this be the same when they move to Universal Credit?
All cases will be looked at on an individual basis. Universal Credit intends claimants to take responsibility for their own finances, but help will be provided for those who need it.
Can rent arrears be recovered from claimants through a deduction to their Universal Credit?
Yes, arrears of rent and service charges for the property the tenant is currently living in are included in the list of deductions that can be made from a Universal Credit payment. Furthermore, DWP is currently exploring increasing the rate at which deductions can be made.
Landlords can phone DWP (0845 600 0723) to request a ‘third party deduction’ for rent arrears when they reach the equivalent of two months rent. They will use the same phone number or address that is used for all Universal Credit enquiries. If they contact DWP and the claimant is claiming another working age benefit, they will be transferred to the
relevant department. Likewise, if they contact the current working age benefit departments and the claimant has claimed Universal Credit, they will be transferred to a Universal Credit agent.
Will landlords and other third parties be able to tell the DWP if they know a claimant is likely to need support (e.g. because they are in rent arrears)?
Yes. Information from third parties, including the claimant's landlord, will be considered when assessing a claimant’s ability to manage their finances. To protect the claimant’s home, a landlord can notify DWP asking for the housing costs element to be paid direct to them when a rent arrears 'trigger' has been reached.
In current UC areas, the landlord can contact the Universal Credit Service Centre by calling 0845 600 0723 to start the personal budgeting support process. If a claimant reaches their arrears trigger, they will need to show DWP they are in rent arrears.
What budgeting support will be available from DWP and how do claimants access this?
Personal budgeting support will be offered to anyone claiming Universal Credit or transferring from another benefit. Claimants needing help with monthly budgeting will be identified at their first Universal Credit appointment with the Jobcentre and will be referred for personal budgeting support
Many claimants will be able to help themselves through the online budgeting support services that are already available, and we will help people who have a clear need for more intensive support.
Money advice will be offered at a national and local level, and will include a mix of online, phone and face to face services. The face to face services will be offered through the Local Support Services framework when Universal Credit is rolled out nationally.
Can a claimant have their Universal Credit paid more frequently than once a month?
Yes, more frequent payments is one of the options that will be considered if a claimant is having difficulty budgeting. The claimant should contact DWP and they will be offered personal budgeting support.
Will budgeting or ‘jam jar’ accounts be available to Universal Credit claimants?
While the majority of Universal Credit claimants will continue to be paid through mainstream current or basic bank accounts, we are looking at ways to make accounts with budgeting functionality more widely available. We are consulting with financial providers across the private, social and third sectors and considering the best ways to make these
types of products more available.
What support will be available to those who are not able to make and manage a claim independently?
The Local Support Services framework sets out the approach to supporting claimants with additional needs to make and manage a claim under Universal Credit.
The aim of the framework is for DWP offices, local authorities and voluntary sector organisations, working in Local Delivery Groups, to plan and deliver support for these claimants. We know that claimants with the most complex needs usually have contact with many different types of support providers, so the framework encourages these providers to work together to offer joined-up support.
How will you decide which claimants need support?
Decisions will be taken locally based on the circumstances and needs of individuals. We will consider information from tenants and landlords before taking these decisions.
How can landlords become involved in local delivery partnerships?
DWP district managers and local authority managers have been asked to work together to create Local Delivery Groups for developing services for claimants with complex needs. Housing providers who are interested in becoming part of a Local Delivery Group should speak to their local authority about what’s happening locally to plan for Universal Credit. Most local authorities have an individual who leads on planning for welfare reform. If this person can’t be easily identified then landlords should contact the Revenues and Benefits teams in the local authority.
How will supported housing be dealt with under Universal Credit?
Residents of supported exempt accommodation will have help with their housing costs provided separately to Universal Credit in a similar way to Housing Benefit in the short term. However, DWP are also exploring the feasibility of a localised scheme that will be flexible enough to meet the needs of individual providers and their tenants.
How will temporary accommodation be dealt with under Universal Credit?
Claimants in temporary accommodation will not be affected by Universal Credit yet. Universal Credit claimants will be asked if they are homeless and living in temporary accommodation as part of the application process. If they say ‘yes’ they will be told that they cannot claim Universal Credit at this time and should apply for existing benefits (for example, Jobseeker’s Allowance, Housing Benefit).
If the claimant is already claiming Universal Credit and then requires temporary accommodation they will receive the housing element of Universal Credit based on LHA rates for the household size including a shared accommodation rate.