50% of Universal Credit claimants now in arrears | Discuss

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50% of Universal Credit claimants now in arrears
19/07/2016
10:39 am
News @ Tenant Referencing
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As the number of Universal Credit claimants in debt is much higher than expected, Lord Freud has commissioned an "urgent" review to directly address the issue.

Describing the proportion of claimants already in arrears before they switched over to direct payment of benefit for housing costs under UC as "frightening", speaking in the House of Lords last Wednesday he revealed that he had “commissioned work from the department to help understand the true level and causes of these arrears”.

He said: “There is a lot of complexity here; it is not straightforward at all. I am looking at it with some urgency.

We need to understand what the existing arrears are. They are much higher than we expected – 50% – and that is a frightening fact.” 

Last month, a report by the National Federation of ALMOs (NFA) and the Association of Retained Council Housing (ARCH) found 79% of 3,000 tenants claiming Universal Credit in England are in rent arrears, compared to 31% of other tenants.

The irony is now, that landlords are going to be paying for the governments catastrophic failure with Universal Credit with the help of the latest stealth taxes introduced (Capital Gains Tax cuts and the additional 3% Stamp Duty rate), instead of building the homes that our country so desperately needs.

So now that the majority of your tenants are paid their housing benefit directly, rather than it automatically going to you, please be aware that they are fully responsible for paying the benefit directly to you. Even though research carried out at the introduction found that 92% of tenants would prefer their housing benefit paid directly to their landlord …!

Related topics:

The importance of referencing Universal Credit tenants

First Ever Universal Credit fraud and error stats released

19/07/2016
8:01 pm
PaulBarrett
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I take my hat off to ALL LL who are prepared the accept HB tenants

You will need much luck in the future.

UC is potentially the death knell of many LL

I hope LL are prepared for long evictions with no rent coming in!

Govt must surely have to change the UC HB element process or be faced with millions of homeless HB tenants

20/07/2016
6:57 am
David Price
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At one time I had some sympathy for HB tenants but no longer.  The government does not care so why should I?  The only language this government will understand is massive HB homelessness, only then will the rules be changed.

20/07/2016
7:30 pm
PaulBarrett
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It would seem that many LL are just choosing not to even bother renting to HB tenants because of the frozen HB.

Other tenants not reliant on HB are now paying higher market rents.

LL just don't need the hassle of HB tenants anymore due to the sufficient availability of other tenants.

With the continuing anti-LL agenda of most councils they will find it becomes even more difficult to place their homeless HB tenants into the PRS.

You would have thought that the councils would pay some of the TA costs as a top up on LHA to pay the market rent.

That has to be cheaper than the council having to pay full TA costs!?

But of course that would make economic sense which is something councils don't have.

With UC that is another insurmountable problem due to the HB element being the last benefit to be calculated within the OBC.

Plus UC HB element being paid to the tenant who invariably won't pass it onto the LL

Of course they may pay the HB element which could be as little as £2 per month!!!

HB tenants refuse to accept that they should have to pay some of their other excessive benefits to top up the HB element to pay the full contractual rent.

They don't see why their lifestyle should suffer!!

I wouldn't touch HB tenants until the UC HB element problem is resolved.

20/07/2016
8:31 pm
David Price
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Only today I accidentally took my first (and last) UC tenant.  He is fine but the DWP is a nightmare, fortunately I have a guarantor so this time I will be Okay.  Never again, they can sleep in the gutter for all I care, I run a business not a charity.

26/07/2016
2:51 pm
gazman
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This is the same Freud I wrote to twice and received the standard reply - "we want tenants to treat the payment like a living wage". Yeah right !!
They are buffoons believing that the rent would be paid. I am very surprised the arrears are occurring in only 50% of cases.
This ' direct to tenant ' benefit payment has been tried years ago and failed.
Tenants who get benefits are vulnerable by definition.
There is nothing fundamentally wrong with UC as it lumps the many benefits together and balances zero hour contracts with benefits, without suspending certain benefits whenever a recipient works.
The issue for landlords is the shocking situation of the tenant not paying the housing element. I have even suggested it should be a criminal offence to mis use tax payers money this way.
It cost the government NOTHING to divert the payment to the landlord, and this should be the way forward to help alleviate the already massive housing shortage.
Lets hope that common sense prevails now that IDS has run off and Freud has seen the reports.

26/07/2016
9:20 pm
PaulBarrett
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You misunderstood the fundamental problem with UC in that the HB element is the LAST benefit to be calculated within the OBC.

It should be the FIRST benefit within the OBC to be calculated.

The problem occurs when the OBC limit is sufficient to encompass other UC benefits, but NOT all of the HB element.

This means that there will be a reduced HB element and dependent on the total amount of the other UC benefits the HB element could be reduced to as little as £2.00 per month or every 4 weeks.

Now of course what should happen is the tenant pays the full contractual rent out of their total UC and any other income.

But feckless tenants will state that their other UC benefits are for them and the HB element is for the LL!!

Clearly a farcical situation.

But that is how feckless tenants think.

The point being that the OBC was introduced to encourage tenants to reconsider their housing costs to potentially persuade them to move to cheaper accommodation.

Many HB tenants refuse to accept this concept.

What they should do is pay their FULL contractual rent from their total income and whatever remains is for them to live on.

If they have high housings costs this would mean reduced benefit income to live on which tenants refuse to accept.

They do not see why their lifestyle should suffer caused by the OBC.

Of course the OBC may be avoided by working 16 hrs per week, witness the well known case of the single mother with 8 children who is currently in receipt of about £35000 in total welfare and achieves this by allegedly working 2 jobs totalling 16 hrs

She was forced into this otherwise her benenefits would have been reduced.

LL need to stop obsessing about the HB element.

They should be concerned about being paid the full contractual rent irrespective of how much is remaining of other UC benefits for the tenant to live on.

A UC tenant will always put their other domestic circumstances before the rent payment.

Therefore the ONLY way to guarantee that a LL would receive the total contractual rent is via a CU where the FULL rent is paid first irrespective of what the HB element is.

Of course a tenant could always cancel the CU arrangement and that must surely indicate to the LL that he may face rent default issues

So in summary forget what the HB element is, it is NOT your concern, being paid the FULL contractual rent FIRST is!!

Whether your tenant will accept paying the full rent with a reduction in other benefits caused by the OBC is another story.

Perhaps LL need to have a good face to face chat about the reality of the OBC and how it may reduce their overall welfare payments.

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