3rd May, 2017
Good morning
In recent weeks, DWP has been trying to defend Universal Credit’s widely recognised structural and administrative flaws, which Social & Private Landlord organisations maintain are causing tenant hardship and significant hikes in rent arrears, due mainly, to:
- The 7 day waiting period, which applies to some claimants, before eligibility commences;
- The month, plus 7 days delay before the first payment is made to all claimants;
- A “not fit for purpose” APA scheme, impeding and frustrating communication and access to redirected “housing costs”.
From Inverness, East Lothian, Edinburgh, Great Yarmouth and the London Borough of Croydon, councils have been consistently reporting rent arrears hikes of around 80-90%. Similar results were found in the National Housing Consortium reports (3 in total) http://www.northern-consortium.org.uk/2017/03/01/nhc-publishes-third-universal-credit-impact-report/.
Despite this weighty data, DWPs response to date has been to criticise the figures, as quite misleading because of what DWP Minister Damian Hinds refers to as “book” arrears – He said in answer to a PQ – “arrears can arise not only because of failure to pay rent but also through the charging policies of landlords that can create “book” arrears from the outset of a tenancy …………………………………we are undertaking work to investigate the issue of rent arrears in Universal Credit, aiming to understand the true level of rent arrears and what is causing them.”
There is no doubt calculating rent arrears, on a consistent basis, when different organisations apply their rent debits on, weekly, fortnightly, 4 weekly, monthly and other cycles, can be quite difficult. Those landlords who collect on a monthly basis, are best placed, in terms of UC, as this approach correlates with DWP’s Landlord Managed Payments’ 2 month’s rule. In all cases, the “true” rent arrears figure should be assessed in line with DWP guidance circular A26/2009 which was issued following a First-tier Housing Benefit appeal tribunal ruling (Doncaster v Coventry City Council, First Tier Tribunal 032/09/00932, 5 October 2009). The Chairman in that case expressed the view that: ‘Rent is in arrears once the contractual date for payment has passed irrespective of whether rent is due in advance or in arrear’. Prior to the ruling, council HB sections had been focused on HB payment cycles which, like UC, were paid in arrears.
A number of Local Authorities asked DWP to explain its position, as this was a First, rather than Upper-tier decision. DWP responded:
“The intention behind HB regulation 95(1)(b) is to provide landlords with the security of direct payment as an alternative to seeking possession on a mandatory ground and so avoid a situation arising where a tenant is evicted under Housing legislation. In view of this, we have consulted with lawyers at Communities and Local Government to establish at what point they consider a tenant to be in arrears of eight weeks. As they are also of the view that rent is in arrears once the date for payment has passed without any payment being made, we have revised the LHA guidance so that it is consistent with this position.”
The LHA guidance as today’s date still reflects that same approach https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/324708/lha-guidance-manual.pdf The guidance at page 45 provides some examples of how this works in practice. So, for example, if you collect rent monthly, in advance, in a new tenancy, with the first payment due on 1st February, and then 1st March etc. by second March (1 month+ 1 day) you could report 2 moths arrears!
In fact, aware of the “Coventry Judgement” as it’s known in housing benefit and welfare rights circles, I raised its applicability with DWP hierarchy around two years ago, when it was confirmed the same ruling would apply to Universal Credit. I was also told, that any historic rent arrears, as long as they related to the claimant’s current address, would also be considered when assessing the level of rent arrears. So, when you’re applying for a Landlord Management Payment, make sure you’re correctly applying this approach. If you do, considering it takes it takes no less that 5/6 weeks, most probably more, at present, to receive that first payment, you should be able to secure your 1st tier grounds for redirection. Many of my website and retainer clients are achieving 60% + by adopting such an approach.
If you encounter any problems with this or any other aspect of Universal Credit or welfare reforms please contact me bill@ucadvice.co.uk or on 07733 080 389.
Bill Irvine
UC Advice & Advocacy Ltd