?Since the outbreak of COVID-19, Universal Credit has become a lifeline for many households. In the first two weeks of lockdown alone there were over 500,000 claims per week, more than nine times the usual weekly level of applications.
As of July, the Department for Work and Pensions (DWP) had 5.6 million people claiming Universal Credit - up from 3 million in March. So how does this impact landlords?
What has often been over looked is that many of these new claimants will be tenants who have never previously needed to rely on the welfare system but have since been furloughed, had their hours of work reduced or even lost their job. This means that thousands of landlords who have no prior experience of the welfare system may now have tenants in receipt of Universal Credit.
Understandably, many landlords are anxious, not only due to the current situation but because of the criticism Universal Credit has received since its introduction. However, in our experience one of the biggest barriers for both landlords and tenants is a lack of understanding of the new system.
In many cases, if tenants are provided with the right support to ensure they are receiving the correct amount of housing benefit, and landlords are educated on how the system works and in what circumstances they can apply for direct rental payments, then there is usually a solution that works for everyone.
Earlier this year, we joined other industry experts in responding to the House of Lords Economic Affairs Committee’s inquiry into the economics of Universal Credit. Following this, a series of recommendations for an overhaul of Universal Credit have now been handed to the DWP and changes are slowly being implemented.
One of the most fundamental issues raised was Alternative Payment Arrangements, where rent is paid directly to a landlord before the tenant gets the remainder of their Universal Credit payment in their account. We have been calling for greater flexibility of direct payments to landlords for a long time because the current system has clearly led to increased rent arrears and put tenants at greater risk of eviction.
This is something that both landlords and tenants have called for and the report recommends that claimants should be given the choice, at the beginning of their claim and not when significant arrears have accrued, of having an Alternative Payment Arrangement.
If you have a tenant who is suddenly having to rely on Universal Credit and is unable to keep up with rent payments, take the first step in reaching out to them, they may be embarrassed or frightened to tell you for fear of being evicted. Gain a greater understanding of their circumstances and how temporary or long-term this may be.They may not know about Alternative Payment Arrangements. We can help landlords and tenants set this up which not only gives tenants greater support in managing their finances but gives landlords the confidence to continue letting to their tenants, despite their temporary financial difficulties.
As you may or may not be aware, the government has now made it a legal requirement for landlords to give tenants six-months’ notice when repossessing homes (until at least 31 March 2021) for most kinds of eviction notices. With this in mind, landlords should be looking to try and work with their tenants to sustain tenancies and maintain a positive relationship.
I believe that given the right advice and support, we can change the archaic preconceptions of tenants who receive housing benefit, preconceptions which are created by the minority but impact the majority. We can also give landlords the reassurance they need to adapt their investment model and support the housing market at a time when they are so desperately needed.