The Residential Landlords’ Association has welcomed a Government commitment to work with landlords, to make a new system of direct rent payments successful when Universal Credit is rolled-out.
In a speech at yesterday’s Chartered Institute of Housing conference, the benefits minister, Lord Freud, stated that the Government would work with social landlords to avoid tenant rent arrears and landlord cashflow problems when Universal Credit is launched nationwide later this year.
Lord Freud said, “The key to making direct payments work will be our on-going collaboration with you. So your views about your tenants’ ability to cope with direct payments will be central to the decision on who to pay the rent to and we will work closely with you when we are assessing someone’s capabilities before they are moved onto Universal Credit.”
However, Lord Freud confirmed that the Government did not “want non-payment of rent to be a way out of direct payments” and that, “Options at this point could include a reassessment of an individual’s financial capability, a possible move to managed payments, or possibly extra support to get the individual on the right track to prevent the accumulation of further arrears.”
The minister suggested that around 30 per cent of tenants will have their housing costs redirected to their landlord from the onset of the national roll-out.
He also confirmed:
- Payment of the ‘housing cost’ element would automatically be redirected to landlords when two months of rent arrears accrued.
- The DWP – if alerted by a registered social landlord that one months’ housing costs had not been paid to the landlord, or had been accrued over an extended period of time – would suspend payment of the housing costs and a decision made as to whether payment should, at that point, be reverted to ‘Landlords’ Managed Payments’.
- Tenants could be required to repay the missing rent by way of accelerated deductions over a six to nine month period, assuming they had no other ‘third party’ deductions.
- The principles of how these various ‘Exception Payment’ provisions could be applied would be explained in DWP guidance, to be published shortly.
In response to Lord Freud’s speech, the RLA moved quickly to seek assurances that the Government’s commitment to direct payments included the private rented sector, and was informed by the DWP that one of the principles of Universal Credit was to have parity across the sector.
In response to the speech, Alan Ward, chairman of the RLA, said, “The RLA is encouraged by this announcement. We have long argued for direct payments, and received assurances when we met Lord Freud earlier this year. However, his latest comments make it clear that the Government has listened to our concerns, and we look forward to the publication of the DWP guidance in due course, which we hope will confirm the private rented sector’s parity with the social sector.
“In the meantime, the RLA will be working with our partners in the housing sector and will continue to lobby the Government to iron out the problems that still exist within the Universal Credit model.”
Highlighting one such area of concern, further comment was made by Bill Irvine, housing benefit expert and RLA trainer, who said, “Lord Freud didn’t say who would provide the intensive budgeting and financial advice needed to deliver such ambitions. Good quality, effective money advice is best undertaken face-to-face with tenants, by suitably trained officers.
“As those participants in the current pilots have already recognised, services of this quality and intensity are expensive and beyond the scope of many landlords. An arms-length, online service is no substitute for face-to-face support, so Lord Freud should now be pressed to provide the much needed financial support so that landlords can deliver his ambitions.”