Universal Credit is currently being rolled out across Leicester and the East Midlands so it’s likely you know a tenant who is in receipt of universal credit whether they live in one of your houses or flats or have inquired about renting one of your properties, and if you don’t know any universal credit claimants in Leicester, it won’t be long before you meet them as Universal Credit replaces Housing Benefit in Leicester.
One question landlords are asking more frequently is how they can ensure rent is received as smoothly as it can be amid the rollout of the new benefits system in Leicester so we’ve put together a short guide in response to these questions.
What is Universal Credit?
For many landlords who are accustomed to tenants paying their rent via housing benefit may have missed the headlines about the controversial new system which replaces the old benefits system of how housing benefit and unemployment, disability, single parent and other low-income benefits were paid. Under the new system, all of the benefits tenants receive will be paid to them in one monthly lump sum payment. The idea is to help long-term unemployed better budget their money. When a long-term unemployed person doesn’t have to pay their rent because the local authority (eg. Leicester City Council) pays the rent directly to the landlord/agent, when they finally find work and come off of housing benefit, it can be difficult for them to factor in their rent making it harder for them to sustain their housing as they fall into arrears. A benefit tenant being given £120 every two weeks will see a wage of £400 to only need to cover food and bills and leaving themselves short when they later budget in rent costs.
In June the National Audit Office published a critical report over the rollout of Universal Credit which is due to be fully rolled out across the country by the end of the year but some say the government are far behind that timescale. Among the main findings, the report said that that four in every ten claimants surveyed by the Department for Work and Pensions (DWP) are experiencing financial difficulties and recommends the DWP;
- Improve the measurability of the benefits provided by the new Universal Credit system,
- Ensure operational performance and cost improvements before increasing the caseload of Universal Credit claimants,
- Improve the evidence base by ensuring feedback is received and reviewed from delivery partners, and;
- Make it easier for v with applications and to support claimants.
How do I know if my tenants are entitled to Universal Credit?
There are three conditions tenants have to meet to be eligible for support with housing costs in Universal Credit:
- Liability – The claimant is liable for payment. This is established from the tenancy agreement
- Payment – The payments requested are solely for rent. Again, this is established from the tenancy agreement
- Occupancy – The claimant is living at the address for which they are liable to make rent payments.
The claimant needs to provide evidence of their private rented housing arrangement at a face-to-face interview. This needs to happen before any payment can be made. Supporting evidence must include proof that the claimant is:
- Legally responsible for paying rent (often proved with a valid tenancy agreement), and;
- Living in the property (by providing a copy of a utility bill).
- Details of the landlord or their Leicester letting agents, such as a name, address and contact number or email address (often found in the tenancy agreement), and;
- Verification of the frequency of rent payments (which is usually in the tenancy agreement).
New tenants may only have a tenancy agreement as evidence, however, landlords can provide a supporting letter for their tenants as further evidence. This could be to confirm the tenant is living in the property or to show they’ve paid a deposit. If a private or social sector tenant isn’t able to supply the appropriate evidence DWP will send a form to the landlord asking them to give details of the tenant’s housing costs.
Leicester City Council will be able to provide a full list of what is required to meet the eligibility and what documents are required as evidence to be entitled to the rent element of Universal Credit.
What if my tenant is in receipt of Universal Credit but fails to pay their rent?
If you realise your tenant is in receipt of universal credit and are failing to pay the rent, you can apply for a managed payment to landlord or rent arrears deduction using the government form UC47.
Once the application has been processed by the DWP, the landlord or agent will be advised of the decision. If the application is refused, DWP won’t tell you the reason why because of data protection regulations and claimant confidentiality but if they do approve the application, the amount you receive may change from month to month depending on the claimant’s Universal Credit award (dependent on household income and whether they’ve complied with their obligations under universal credit) but it’s usually up to a maximum value of the eligible housing costs. When managed payments stop, the DWP will inform you or your agent but won’t give explanations as to why due to data sharing regulations.
This all sounds complicated. What can I do?
If you’d rather avoid the storm of Universal Credit and your tenants claim housing benefits or you’re already fighting the challenges of the rollout in Leicester, contact Harry Albert Lettings & Estates today to discuss the management of your property in Leicester. They’ve dealt with the benefits system and understand it very well, they’re able to offer support to you and your tenants to help navigate the benefit changes and ensure you maintain maximum yields from your properties in Leicester.
Harry Albert Lettings & Estates are Leicester letting agents who specialise in maximising incomes generated from property and are keen to bring your property onto our books. They have an in-depth knowledge of the Leicester property market, particularly the LE4, LE3 and LE2 postcodes, as well as the city centre and the Syston property market. They’re your truly local property expert.
The local Leicester estate agent is based in Belgrave and they’re committed to keeping things simple, that’s why we can fit our fees on the back of a first class postage stamp!
If you instruct Harry Albert Lettings & Estates to manage your property, you’ll pay:
- Set up fee: £100 (one-off – You’ll only ever pay this once per property)
- Tenant Find fee: £99 (every time you need new tenants)
- Monthly management fee: 7% of the rent due each month.
Harry Albert Lettings & Estates never charge renewal fees and provide a free management transfer service if you’re unhappy with your current agent! The fees above are the only fees you’ll ever pay! Find out what’s included in their full management service by clicking here or visiting: https://www.harryalbertgroup.co.uk/landlords
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