Some housing associations are so concerned about their tenants falling into arrears when welfare payments are paid direct to them monthly, under the Universal Credit scheme, they are asking them pay some rent in advance now.
The Town and Country housing association has told those tenants who are in receipt of Housing Benefit to pay around £15 per month extra to build up a reserve fund of one month’s rent, so that they can easily meet their first rent payment once Universal Credit comes in for them. Universal Credit payments will be made 4 weeks in arrears.
The association provides around 9,000 homes in 22 local authority areas around the south east regions. They want people to pay in advance now to avoid rent arrears, financial distress and court appearances which would put their tenancies at risk when the new payments system comes in.
The system of paying tenants their welfare payments direct to tenants and expecting them to pass the money on to their landlords has been operation for some time with private landlords. Up until now social housing providers, the local councils and housing associations, have been exempted from this system, so rent payments have still been paid direct to these landlords.
Some councils and housing associations, plus the housing charities are reflecting many private landlords’ concerns that people will default on their rent payments when they have to pay the rent one month in advance, under the new Universal Credit system.
Town and Country have said that the advance payments will help their tenants with the transition to the Universal Credit system when it is introduced and when tenants will be responsible for paying their own rent out of the welfare payments they receive.
The Department for Work and Pensions has said it will put in place arrangements to ensure that those tenants that are struggling with the new system will get all the help and advice they need.
It has also said that those who want to, or need to, can continue having rent paid directly to their landlords.
Universal Credit is to be introduced nationally between now and 2017, but its implementation has been dogged by expensive IT problems and is behind schedule. Currently the scheme is being rolled out in selected test areas and it is estimated that around 12,000 are now on the new benefit system.