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  • LHA/Universal Credit

    First universal credit tenant!!!

    Intereresting Posts

    I still maintain that LHA should be kept with the Councils along with Council Tax. There should also be a stronger bridge between Councils and the DWP.

    Failing this the LHA element of UC should be paid directly to the landlord if the landlord and tenant request this at the start of the tenancy. Any politician who disagrees is simply blind to the demographics of the UK population.

    The current situation is simply absurd. We have one tenant (single lady) who has arrears and have had dealings with the DWP regarding the case. They (DWP) quite simply haven't a bloody clue what is going on. After three months, one payment was on time and the latest is 2 weeks late. Last Thursday we were promised a call back within the hour. Still waiting.....

    I totally support previous comments and add the following.
    Have attended 3 Universal Credit presentations in my role as NLA rep in local authorities where going live for new single claimants and have expressed my serious concern to DWP personnel present re risk to landlords - especially in private sector re transition to UC from LHA. Our only opportunity currently is to feed in real life experience to the consultation currently under way by DWP with Blackpool landlords. If anyone has a contact for this perhaps they would share?
    Meanwhile, in addition to precautions already under way, I would suggest exploring whether new tenants on UC open a credit union account and benefit payments paid in to this account where there is the facility for rent element of UC to be ring fenced and paid to landlord monthly. Credit Unions with this type of landlord agreement will also inform landlords if tenant closes their account/cancels rent payment mandate.
    Its not perfect but hopefully will help. Otherwise we are at serious risk as no UC payment will be paid to new claimants for at least 5 weeks from registration!! Once received, will landlords get rent arrears paid? Who knows!Huh

    Ensuring the HB element of UC is deducted from UC and paid directly does not address the problem of tenants failing to pay the full contractual rent from UC no matter how much more than the HB element of UC the rent is
    For those LL prepared to take the risk of clawbacks it should be allowable than ANY UC claimant may require the full rent to be paid directly to the LL
    This would effectively mean that most HB LL would wish for such agreement by the tenant to have the full rent deducted from the UC and paid directly to the LL
    Which is why it will never be allowed
    more LL will just give up taking HB tenants
    Take a look at tasker payment services

    For those members interested in Universal Credit the geographical rollout continues and whilst claims are being currently limited, in most areas to the simplest of cases i.e. young, single, newly unemployed, it appears that the pace has already started to quicken, catching out some PRS landlords who obviously felt or were hoping it wouldn't affect their tenants anytime soon.

    Despite the widespread publicity about the rollout many private landlords have still failed to grasp that the "housing element" will be paid as part of the UC award and the scheme has nothing to do with the local council. Universal Credit is being administered by the DWP with claims being made partially online and thereafter completed, following "claimant commitment" interview with Jobcentre Workcoach. No longer will you be able to phone or pop into the council office to resolve your tenant's issues, which is a pity.

    For the majority of couples & families claiming LHA, the local council will continue administering the LHA scheme until it's decided to "migrate" all existing claims over to Universal Credit. The DWP hope to deliver the majority of these legacy claims during 2016/17.

    Prior to the rollout, in your area, you'll find your local council is likely to organise a seminar to explain the stages in the rollout and timings. At the moment you can find approximate details for the September 2015 to Aril 2016 expansion here: https://www.gov.uk/government/uploads/sy...d-four.pdf

    If you've not already familiarised yourself, do so as quickly as possible. You need to find out about the claiming process; the date of claim; award date: benefit assessment period; how to notify changes in circumstances; the vagaries of the "whole month rule"; how & where to apply for Landlord Managed Payments (rent direct) & Third Party Payments (deductions for rent arrears); impact of sanctions etc. etc.

    If you need to find out more about these changes have a look at https://www.rla.org.uk/landlord/courses/...urse.shtml or my own website where you'll find:
    a) The legislation; and
    b) DWP guidance; and
    c) Regular updating bulletins; and
    d) A UC Calculator to assess your tenant's entitlement; and

    Much more besides.

    Bill Irvine
    UC Advice & Advocacy

    Great advice and update notes from Bill and I totally agree with all contents of his post.
    From further meetings with DWP Universal Credit implementation team and social landlords I can add a few other thoughts.

    Firstly, please remember that if a prospective tenant on benefits comes from a pilot area to your area where UC has not yet started then he/she will stay on UC. It's like a lobster pot once in you can't escape!!

    Next, although DWP have yet to clarify the exact position you are likely to face a period of up to 6 weeks between last LHA/DWP payment and the first UC payment into tenant's bank account. There will be a loan scheme from DWP to help bridge this gap repayable over 6 months but final details are not available yet and DWP want it to be exception rather than the rule. The cynic in me wonders whether part of the new govt's cuts will be effectively stopping benefit payments for around a month during the transition and pocketing the saving in cost.

    It's interesting to hear that many social landlords have started a saving scheme for their tenants where they are trying to save between £3 and £6 per week to bridge the gap and avoid rent arrears. Furthermore, new social tenants are facing a requirement to pay the first month's rent in advance for the first time to help plan for transition to UC. Currently many social tenants pay rent weekly in advance!!

    We private landlords - especially those whose business model includes tenants on full or partial benefits need to learn from what social landlords are doing and replicate where possible and appropriate. They are also looking at IT skills development for tenants as claims for UC are online plus basic budgeting/financial planning skills. I am looking at low cost options on the latter items as I may be prepared to pay a third party to assist me with one of my long standing tenants!!

    Finally, if you have a tenant making the transition it is absolutely critical they take to the first meeting with Job Centre work coach/benefits officer all original copies of documentation including previous payslips, identity docs and current tenancy agreement so that they can be copied for posting off to UC claim processing office at Wolverhampton.
    If they don't take these original documents claimants will have to post the original copies themselves to Wolverhampton at their own expense with a risk they get lost.
    I am campaigning for DWP to accept certified copies of these docs with councils and other local organisations authorised to produce these copies for claimants at a low cost but no guarantee they will agree.
    Hope these thoughts help!

    I say yet again the HB element is considered last when it comes to the OBC
    So other benefits may make up the vast majority of the soon to be revised down OBC of £23000
    The HB element may only be £200 per month
    Therefore in the event the rent is not paid the LL will only be able to claim the HB element for direct payment
    Even that will take years to recover as only a certain small amount will be allowed to be repaid to the LL
    UC is a nightmare for LL who have tenants up to the limit of the OBC
    There will be many LL who find themselves in extreme financial difficulty when they discover all they can seek in direct payment and rent arrears recovery is the HB element and NOT the FULL contractual rent
    The HB Element will not be even the existing LHA rate if the OBC is fully used up by mostly other benefits
    I'm not sure whether council tax benefit will be included within the OBC
    If so it makes the situation even worse for HB LL as tenants Will refuse to accept that they will need to use other benefits to pay for rent
    They will pay the HB element as rent but no more
    LL will have little alternative than to evict
    A very expensive process!!

    You are right!
    Several L.A. Benefit Managers have told me how concerned they are re the new planned
    reduced benefit caps.

    Where as now, outside of South East England, very few households are effected by current benefit cap this will bite deep and as you say it will be the housing element that any cap reduction is sliced off.

    DHP (Discretionary Housing Payment) may be a short term aid but most L.A's DHP fund for 15/16 has been cut significantly even if they fully spent their budget last year.
    I believe more benefits will be incorporated into the OBC
    HB tenants just don't seem to understand that their benefit lifestyles will not be so advantageous as it once was
    They will just refuse to accept that they have less money to spend on themselves and will just say the HB element is not the full rent and so cos govt has cut the HB element that is all their are paying
    It is obvious that govt is totally correctly trying to enforce a change in benefit culture
    In that if you want to live in an expensive city you will have less to spend as rent will take most of the benefits
    Essentially it is trying to enforce economic cleansing of the benefit classes to cheaper areas
    Only about 50 years late with such a policy!!
    Let us hope that we see massive movements of the lazy benefit classes to cheaper areas of the country where they can still enjoy their feckless lifestyles but will save govt billions in expensive HB
    Time for LL to invest in cheaper areas within a £23000 OBC methinks!?

    Donnie rightly points to the delay between claim and first payment, the availability of Advanced Payments, the need to provide authentication to the DWP before the claim can be processed. There are many things to consider if you currently accommodate LHA tenants.

    I explain more about Universal Credit, plus the claim process, payment arrangements and what happens when there's a change in circumstances etc.on my website, which I've opened up, on a short term basis, to non-members https://universalcreditadvice.com/universal-credit

    We also go into this in a lot of detail on the advertised RLA courses being offered in various regions.

    Members of my website (£120 per year which you can pay monthly) can also access:

    a) All relevant legislation & DWP guidance which is constantly being updated; and

    b) My regular bulletins, like one I've just issued on "Advanced Payments" https://universalcreditadvice.com/housing...e-payments

    c) Our UC calculator https://universal-benefit-calculator.co.u...rsalcredit

    d) Members can also seek advice via our members forum or e-mail me direct for advice.

    All PRS landlords, potentially affected by the introduction of UC, should keep in mind that successive Governments over the past 30 years+ have been making benefit changes, designed to save costs. Invariably all they achieve is complication at additional cost.

    If you think back to the 2010-12 LHA changes (curbing the London rates to 4 bed properties; 30th percentile; under 35 SAR) the cost of LHA rose from £8 Billion to £9.5 Billion; numbers of LHA tenancies rose to their highest ever 1.7 million, plus the Government had to reinstate the 4% LHA rise in London and highest rented areas. Policies like the "2 exclusive rooms" and"common household" produced yields for landlords previously unimaginable!

    Universal Credit is now in place in large geographical areas of GB. I represent the interests of many Housing Associations already affected and can report that applications for "Landlord Managed Payments" (direct payments of the housing costs) now amount to between 50-60% of claims. So just like things changed for LHA in 2011/12 the same is already applying to Universal Credit. As time passes the pendulum will swing even more in the direction of landlords when the Government realises that many of its ideologies will not work on an operational basis.

    So ignore the scaremongers, especially those who don't have any LHA tenants themselves and who have a tendency to exaggerate, through ignorance of the topic. For example, the Benefits Cap affects 27,000 tenants at the moment or put another way 0.1% of LHA tenants UK wide!

    Find out as much as you can about UC; be hands-on, certainly in the first instance; and don't leave things to your tenants as that is a recipe for financial pain!

    Bill Irvine
    UC Advice & Advocacy