The DWP plans to speed up repayment of arrears for tenants on Universal Credit next month, according to industry body safeagent.

Landlords can currently wait up to nine weeks for arrears to be paid, but the DWP has told the accreditation scheme and other stakeholders that it plans to change its processing method and cut the timescale to about seven days. However, the changes will only apply to new rent arrears applications – safeagent reports that Direct Rent payments as well as Rent Arrears payments will continue to be processed separately.

Big difference

Isobel Thomson, safeagent’s chief executive, says the change will make a big difference to landlords who would know that in the event a tenant on Universal Credit falls into arrears, then these will be paid quicker.

She adds: “We look forward to the detail of the change when it is launched and well done to DWP for their work on this for the benefit of tenants, landlords and agents.”

housing benefit

Bill Irvine, at UC Advice & Advocacy, says there is currently a lag in payments when a landlord is awarded an Alternative Payment Arrangement (APA) or Managed Payment, which is caused by DWP using two separate systems.

“One deals with the Managed Payment (monthly housing cost) which is calculated and paid on a calendar monthly basis, whereas the arrears element is calculated monthly but paid on a four-weekly cycle, 12 times a year,” he tells LandlordZONE.

“Where an APA is awarded late in the tenant’s benefit assessment period, it can cause the arrears payment to miss the payment cycle and means a further wait of four weeks before payment is received. I suspect that’s what DWP is referring to and, if true, would represent progress.”

Wrongly refused

However, Irvine says landlords are still wrongly being refused APAs without explanation, as well as having APAs cancelled without warning or justification. He adds that the DWP could do much to improve its service including by suspending, rather than cancelling, payment when concerns arise over the legitimacy of continuing payments.

DWP comment

A spokesperson says: “We want to ensure that landlords receive their rent arrears in full and on time. That is why we have shortened the timescale to within seven days of the claimant being paid their monthly UC award, and landlords receiving payment.”

3 COMMENTS

  1. This article does nothing to persuade me to let to tenants on UC, it’s just far too risky and far too much paperwork and time involved if the tenant decides not to pay the rent.
    Today I had to decline a prospective tenant who relies completely on benefits. They had a physical disability and their partner had a mental health issue. They have two little children and have been looking for a property for over a year(why they would have another baby in their homeless (with family) situation is beyond my comprehension). They didn’t have a homeowning guarantor.
    If the rent could have been paid to me direct, with no consequences for me if the tenant wasn’t entitled to the HB element, I would have seriously considered them.
    The man was close to tears, mostly of frustration due to being turned down so many times by other landlords, when I explained why I had to turn them down. But I’m running a business. The system is against families in this situation and needs to be addressed so the landlord is in a better situation and more able to offer tenancies to the more vulnerable people in society.

  2. Berlingogirl,

    The truth is, the vast majority of benefit reliant tenants prove trustworthy and look after properties. Of those PRS tenants currently claiming Universal Credit only 5% have their “housing costs” paid to their landlord. This contrasts with 33% of council & housing association ones.

    The disparity can partly be explained by DWP’s repeated refusal of perfectly valid claims and, in some cases, wholly unjustified cancellations, with payments being transferred to already established delinquent tenants.

    In terms of the other risks, like overpayments and their recovery, they’re frequently overstated. If you know how to challenge these, invariably councils & DWP back off.

    Bill Irvine

    • I’m sure that most tenants who rely entirely on benefits are trustworthy and look after the properties but more than a few I’ve had in the past have not and have left the properties in a terrible state. It’s cost me a lot of time and money to out right with no chance of recouping that money from the tenants. Taking on this kind of risky tenant is not something I’m prepared to do anymore. I’m not entirely happy with this decision but it is a business one. Why take the risk when there are employed people wanting properties?

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