Direct Payments can now go to Landlord

  • The government have changed universal credit policy to allow automatic direct payments of housing benefit to landlords.

    If the tenant is more than 8 weeks in arrears then the benefit payment can be automatically set up to be sent to the landlord.

    It has not been dramatically announced, but revealed in the details given to the Greater Manchester housing benefit staff.

    The area of Ashton Under Lyme are the first to officially trial universal credit starting yesterday, and are the first to see this change in the details, reading:

    Landlords can refer rent arrears cases to Universal Credit; those which are under 2 months rent will trigger Universal Credit to contact the claimant to discuss their non payment as part of the Personal Budgeting Support process, where as those with over 2 months arrears will be switched to direct rent payment automatically and relevant budgeting support activity arranged subsequently.

    The adjustment to the scheme has been welcomed by many, who have been saying since universal credit was first announced that direct payments may not be suitable for all circumstances.

    The original concept that all direct payments of benefits go to the tenant did not take in to consideration that this would not be suitable for everyone, and could result in tenants falling behind in payments and a deficit building up for the landlord.

    Read more about Universal Credit.

    The change has been made following pilots across the country, which have proven that the method for direct payments will not work for every tenant and is likely to result in a shortfall for the landlords, and trouble for the tenant.

    The government have maintained that they would not change the rules, in spite of the results from the pilot, so the change is a surprise, but a very welcome one!

    The policy by the coalition Government, which had previously insisted that direct payments to landlords would only be allowed in exceptional circumstances and even then not automatically.

    Richard Jones, policy director of the Residential Landlords Association (RLA), said:

    The RLA welcomes this new guidance to DWP staff, which represents a significant step-change in attitude by Government; and, for the first time publicly acknowledges that direct payments to landlords are a crucial component of any welfare reform process.

    However, Government promises of automatic direct payments do not yet extend to the national roll-out of universal credit later this year, and we are eager to ensure that it will apply when this happens.

    At the same time, the RLA will continue lobbying for a shorter time period in which automatic payments can be triggered, and for more details about the direct payments process.

    It is important for landlords to know that if tenants fall into arrears an immediate stop will placed on further payment of housing costs to the tenant until direct payments to the landlord have been established.

    A DWP spokesperson said:

    Paying housing costs direct to claimants will allow them to take greater responsibility of their finances and breaks a barrier that people can face when moving into work.

    The safeguards in the pathfinder area have existed for private sector housing benefit claimants since 2008.  We have always been clear protection will continue under Universal Credit.

     

     


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