New Universal Credit system will see rent be paid directly to landlords

Significant changes are being made to the Universal Credit system that will see the housing element of the benefit paid directly to landlords at the start of a claim.

Currently, both social and private tenants who claim the controversial benefit are responsible for making rent payments to their landlord themselves.

But research shows that many tenants would prefer to have the assurance that their rent is paid direct to the landlord and now it would appear that their right to do this will finally be introduced as part of a new Universal Credit system.

As Universal Credit payments are monthly it has left many claimants struggling to budget and ensure they have enough cash to meet the payments.

Many people seeking help with their Universal Credit claim are in rent arrears, according to Citizens Advice.

More generous advance loans for new claimants and an additional two weeks of housing benefit while they wait for Universal Credit payments to start were among the measures introduced by the government last year to address concerns that Universal Credit was pushing tenants into arrears.

But a report published by Citizens Advice in February revealed that 49% of those it helps with Universal Credit were in arrears on their housing payments.

This has discouraged some landlords from letting to tenants in receipt of Universal Credit because they are concerned they will not receive payment.

Only tenants on Universal Credit who are struggling to manage payments themselves and who are in arrears to their landlord can apply for a direct payment to landlords to be made in the form of an alternative payment arrangement (APA).

Landlords can also make the request by submitting a UC47 managed payment and rent arrears form, but just 5% of Universal Credit claimants in private rented housing have their rent paid directly to their landlord, according to the government.

But the new online system will allow private landlords to request that their tenant’s rent to be paid directly to them.

Caridon Landlord Solutions, which provides advice on Universal Credit and housing benefit to the rental sector, says it has been trialling the online scheme with the Department for Work and Pensions (SWP) since October last year.

Given around a third of Universal Credit claimants are private renters that means around 2 million people could have their rent paid directly to landlords moving forward.

The new scheme could also make it easier for other renters on Universal Credit to find private landlords who will accept them.

Sherrelle Collman, managing director of Caridon Landlord Solutions, commented: “Caridon believes that the paper forms are taking weeks to be processed, sometimes getting lost along the way and all the while rent arrears are mounting up.

“We have been working with DWP to develop an agile online system, making suggestions for adjustments to ensure it is as user friendly and efficient as possible - not only to get payments made directly to landlords where necessary, but also to speed up the process.”

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