Universal Credit to be Paid Direct to Landlords

By 3 min read • January 21, 2019

Universal credit has been highly controversial since it was first introduced back in 2013. On paper, it sounded like a good idea. Rolling individual benefits up into one single payment cuts red tape and makes it easier for benefits claimants to apply. However, in practice, it has caused a issues for the government – and for claimants.

Many benefits claimants are waiting more than five weeks for their universal credit payments to come through. Under the old system, tenants had the option to request that their Housing Benefit was paid directly to the landlord. With universal credit, claimants receive a monthly payment that includes the housing benefit portion. They must budget carefully to ensure they can pay their rent on time, directly to the landlord. Not surprisingly, this has caused a lot of tenants to fall into arrears, and when payments fluctuate, which according to anecdotal evidence from many claimants happens quite a lot, tenants are in even more trouble.

There is an option for tenants to have their housing costs paid directly to the landlord, but it can take months for an arrangement to be put in place. In the meantime, landlords are left out of pocket.

Rent Arrears Shoot Up

Figures from the Residential Landlords Association show that average rent arrears have shot up from £1,600 to £2,390 in a year. For landlords, this is a huge problem. Because of problems like this, the RLA has been campaigning for changes to the way the housing benefit component of universal credit is paid.

“Anything that helps this will give landlords much greater confidence in the system and ensure tenants have greater security in the knowledge that their rent payments will be met,” says Chris Town from the RLA.

Private Landlords Ban Tenants on Benefits

Around 20% of private landlords have banned tenants on benefits. They say they are running a business, so they can’t afford to take the risk that their tenant might fall into rent arrears. The housing charity, Shelter, claims that homelessness has spiked since universal credit was introduced.

Government to Take Action

The government has looked at problems associated with universal credit and decided to take action. On Friday, James Brokenshire, secretary of state for housing, communities and Local Government told the media the government was putting in place a new system whereby landlords would be paid directly if their tenants were claiming universal credit.

“This important change will help strengthen the choices and opportunities available for those on Universal Credit to secure the homes they and their families need,” he said.

Universal Credit Isn’t Working Says Amber Rudd

Amber Rudd, the secretary for work and pensions, has also acknowledged that universal credit isn’t working for many claimants. Government figures indicate that only 5% of claimants living in the private rental sector have their housing benefit paid directly to the landlord. This is much lower than people living in social housing.

“…we need to make it easier for tenants in the private sector to find and keep a good home by giving landlords greater certainty that their rent will be paid,” said Ms Rudd.  “Therefore, I’ve asked the department to build an online system for private landlords so they can request where necessary for their tenants’ rent to be paid directly to them.”

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