Universal Credit pilot schemes in the North-West have now been in operation for some time with a view to implementing the scheme nationwide by 2017. It has not been a smooth ride. Sharon Betton, landlord advisor with the Bolton Bond Board and author of The Landlord Good Management and Practice Guide, works in the areas where the pilot schemes have been running. She reviews the saga so far.
It is sometimes a concern to me that though I read a lot and try and keep pace with what is happening in the South, my main aegis of information and experience is in the North. However, in one respect, perhaps my northern base can be helpful, and that is on the subject of Universal Credit, which had a pilot scheme in Wigan and has since rolled out fairly rapidly in the areas I work in.
Experiences in the areas where Universal Credit is now operational could be of assistance when it comes on-line more widely across the country – and a majority Conservative Government means we can be certain that it will spread nationwide. It is intended that by 2017, all benefit-dependents, whether due to no work or reduced hours and minimum wage earners, will have migrated onto Universal Credit. There were delays in implementation, due to the need for additional training of staff in Job Centres and problems with IT systems, not suitable for purpose when it was planned to start UC claims, but these seem to have been ironed out. Will they meet the 2017 target? Difficult to say, but they will have a darn good try!
Most, if not all, landlords had and have serious concerns about UC and the stated intention to pay the rent direct to the tenants, who should then make arrangements to pay the landlord. Private sector landlords were unhappy, but that pales into insignificance with the experience of social landlords, who for the first time have not been able to receive the payments direct from benefit.
At a meeting I recently attended with the DWP, social landlords who were present made some dramatic statements.
– One reported that although only 100 tenants have gone onto UC, the rent arrears were two and a half times higher than for the non-UC tenants;
– Another social landlord has only achieved a collection rate of 60% and has had to evict some tenants;
– One has had an increase in rent arrears of 45%;
– A collection rate of 72.2% was reported by another.
Had DWP consulted private landlords, they would have had the benefit of their advice and expected this kind of result. They didn’t. It was preferable to think of the private landlord, worried about his rental income, as uncaring and practicing poor management. The information provided by social landlords would seem to disprove this.
By the time it spreads southwards, the waiting days before a tenant can claim UC will be 7 days; as benefit will not be paid for 5 weeks after the claim is made, tenants will be living on air for 6 weeks. Landlords should remind tenants to ask for advance payments on the basis they cannot manage – degrading for the tenant, but it will not be offered voluntarily, though it seems few are turned down when the request is made.
Even the application has caused problems. Under the old system, a housing benefit application was a joint application for council tax. Not so under this system, as council tax is administered locally. The tenant must always make a separate application for council tax credit, but the UC application asks a question about council tax; the claimant specifies yes, he does want to apply for council tax relief and believes he has done all that is necessary. Sadly, he has not and council tax arrears start to accrue. Landlords can help by reminding the tenants that this is needed.
Following representations by landlords, the DWP have now said that landlords will be notified when a tenant puts in a claim for UC, though what landlords really want to know is when a tenant has been sanctioned; unfortunately, it would need a change of law to allow the sharing of this information.
Remember, there is some protection for landlords in the Alternative Payment Arrangements, which can be applied for when a tenant has fallen 8 weeks/2 months in rent arrears, or where there are valid reasons to believe he may not be able to budget ie: alcohol/drug/gambling dependent; previous or current debt issues.
Landlords are advised to attend training sessions, contact local authorities, accreditation and licensing schemes; become familiar with what Universal Credit will mean for them and their businesses and make whatever changes you need to, in preparation for this new way of working.
For advice on buy to let – Ask Sharon