Universal Credit to be docked from tenants in arrears

A mechanism to recover rent arrears is to be incorporated into the new Universal Credit system, by docking the benefit.

Landlords who are owed rent by tenants receiving benefit will be able to request direct payment once a certain level of rent arrears ā€“ as yet undecided ā€“ is reached.

When the Department of Work and Pensions receives such a request, it will automatically initiate a process whereby Universal Credit payments are docked, so that arrears can be recovered.

The deductions currently permitted by law are 5%, but the Government says it is considering whether the proportion should be increased.

Universal Credit, which is being launched this autumn, will pay all benefits as a single monthly amount direct to claimants, including housing benefit.

The system will be similar to the current Local Housing Allowance in that it will be the tenant, not the private landlord, who receives the rent.

However, for the first time, social landlords will not be receiving the rent themselves ā€“ instead, it will go to their tenants, to be passed on.

Housing associations taking part in pilots of the Universal Credit system have already warned that they are seeing increased rent arrears.

The Government has recently announced that the trials, originally due to last a year, will continue for 18 months.

The outcome of the trials will help decide at what stage arrears should mean that the housing benefit element of Universal Credit is paid direct to landlords, both private and social.

Currently, in the Local Housing Allowance system and also a pathfinder trial in Manchester, the trigger is two months of arrears.