Direct Payments to Landlords can Continue under Universal Credit

The Government has listened to the Residential Landlords Association (RLA) on its Universal Credit concerns regarding direct payments, with the Work and Pensions Secretary, David Gauke, confirming yesterday that tenants who currently have their housing benefit paid directly to their landlord can continue under the new welfare system.

Direct Payments to Landlords can Continue under Universal Credit

Direct Payments to Landlords can Continue under Universal Credit

The announcement follows a long-term campaign by the RLA, which has been fighting for reforms to make the system fairer for landlords and tenants alike.

Chris Town, the Vice Chair of the RLA, responds to the announcement: “This is a welcome change and will mean that tenants who choose can be secure that their rent has been paid, and landlords have the confidence to rent out housing to those claiming benefits.

“It is good to know that ministers have clearly listened to the concerns of landlords and tenants.”

The RLA also welcomes the scrapping of the seven-day wait period for claimants to apply for Universal Credit, which will help to prevent some tenants falling into rent arrears – an issue that the RLA has raised with Gauke.

In Wednesday’s Autumn Budget announcement, the Chancellor also revealed that the Government will slow down the rollout of the scheme, although the final completion date will remain the same.

You can read full details of the Budget statement, along with commentary from a host of industry experts, on our sister site Landlord News.

The RLA held high-level talks with the Department for Work and Pensions (DWP) on Universal Credit, meeting with Caroline Dinenage MP, the minister responsible for housing cost support, to discuss rent arrears and direct payments. It also presented key research findings from its welfare survey.

Earlier this autumn, the organisation presented evidence to a Work and Pensions select committee on the flaws of the current rollout.

The committee was told that warning signs were already there, with a 10% increase in rent arrears in just one year, from 27% in 2016 to 38% in 2017, since the housing element of Universal Credit was paid directly to the tenant.

It further warned that, ultimately, private landlords would no longer let to tenants on benefits if the system wasn’t urgently improved.

Although this is great news for landlords, Universal Credit was designed to help claimants better manage their finances, so that they’re prepared for budgeting when they get back into work. For that reason, some tenants may not choose to have direct payments made to their landlords.

If your tenants are on Universal Credit, you’ll be pleased to learn that our Rent Guarantee Insurance covers benefit claimants. Make sure your rental income is protected by taking out this peace of mind cover now:

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