Tenants to be deducted Universal Credit in arrears following shake-up

17th June 2013

A new mechanism to recover rent arrears is to be incorporated into the new Universal Credit system.
Landlords owed rent by tenants receiving benefit will be able to request direct payment as soon as a set level of rent arrears is reached. As yet, that figure is undecided.
Once the Department of Work and Pensions receives a rent arrears request, it will automatically initiate a process whereby Universal Credit payments are docked to tenants, in order to recover arrears more quickly.
At present these Universal Credit deductions are set at five per cent by law, but the Government has confirmed it is investigating whether the proportion should be increased.
The Universal Credit scheme, which is being launched this autumn, will pay all benefits to claimants in a single monthly lump sum, including housing benefit.
Although the system will be similar to the existing Local Housing Allowance, with the tenant and not the private landlord receiving the rent, social landlords will not be receiving the rent themselves – instead it will go to their tenants to be passed on.
Housing associations have already expressed concern about rising rent arrears as part of initial pilots of the Universal Credit system.
The Government has subsequently extended its trials, which were originally due to last a year, to 18 months. The outcome of the pilots will help inform the stage at which arrears require the housing benefit element of Universal Credit to be paid direct to both private and social landlords.
The first full Universal Credit pathfinder was launched in Greater Manchester at the end of April and is using two months of arrears as its trigger point. However, a final decision on the threshold to be used for the nationwide roll-out will be made after all direct payment pilots have been evaluated.

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