What is Universal Credit?
Universal Credit is a monthly payment for people who are either unemployed, or working but on a low income.
It will eventually replace all of the following benefits and tax credits:
- Income Support
- Child Tax Credit
- Housing Benefit
- Working Tax Credit
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
Section 11 of the Welfare Reform Act 2012 provides the calculation of an award of universal credit is to include an amount in respect of any liability of a claimant to make payments in respect of the accommodation they occupy as their home.
Where a tenant accrues rent arrears of 2 months worth or rent or more the landlords can seek for amount to be deducted from the tenant’s universal credits payments to recover the rent arrears. This is legislated for in Schedule 9 to the Social Security (Claims and Payments) Regulations 1987 as amended by the Welfare Reform Act 2012.
Arrears of rent and service charges for the property the tenant is currently living in are included in the list of deductions that can be made from a Universal Credit payment.
Currently, Social Landlords make great use of “Third Party” rent arrears deductions from other benefit entitlements, such as JSA, Income Support, ESA and Pension Credit. The current amount is £3.65 per week and is based on 5% of the tenant’s JSA Personal Allowance. For this reason the higher Universal Credit limit will create the prospect of having the rent arrears cleared much quicker; private landlords can apply for third party deductions also.
If your tenant has accrued rent arrears to the value of two month’s rent or more, you can request a third party deduction to recover the rent arrears using the Request for a Managed Payment or Rent Arrears Deduction from.
The maximum rate at which deductions for rent arrears can be made is 20% of the Universal Credit standard amount. Deductions can be made at the rate of 20% of their Standard Allowance, although, in most cases, the deduction is likely to be capped at 10% or 15% because the tenant has other secondary debts, like Gas/Electricity, Council Tax, or Court Fines.
An e-mail facility is available, allowing landlords to make Alternative Payment Arrangement (APAs) applications, including requests for payment redirection in respect of Universal Credit. APAs are also known as landlord managed payments.
The current methods available for landlords to make a request for an APA are:
- By phoning Universal Credit on 0345 600 0723 requesting a rent arrears form or
- By email – private landlords (who do not have a secure e-mail address) use the UC47 (non-secure) form which is then to be e-mailed to the following address: email@example.com.
- In the event of a private landlord having a secure email address there is a separate procedure to follow. Applications should then be submitted to the UC email address firstname.lastname@example.org. Importantly, only UC47 forms should be sent to this email address. Additional documentation/evidence must not be sent to the email address. Secure e-mail addresses are listed as any of the following Email addresses, GSI, GCSX, GSX, CJX, CJSM or GSE, GOV.UK or GOV.SCOT
- By post – if you are applying by post you must use the secure postal version of UC47.
Evidence must also be provided before a direct payment for the Landlord can be made, such as:
- Details of rent arrears – this will show the current balance on the rent account including the amount of rent outstanding and the amount of rent due and paid for each payment period.
- A full break down of exactly how the rent arrears have been calculated, e.g. the period over which the arrears have accrued.
- A full break down of exactly how the rent amount is calculated/made up if service charges are payable, water rates and any other separate charges which are included with the rent.
- Additionally, you must provide the Landlord’s contact details – the name and address of the Landlord, plus the Landlord’s bank/building society account number and sort code for the account into which the payment has been made.
Courtesy of; Landlord Advice UK.