Since the COVID-19 crisis began, nearly two million applications (as of 4 May) were made for Universal Credit, which is a payment to help with your living costs if you’re on a low income or out of work. As the pandemic leads to significant numbers of workers being laid off or furloughed, a growing number of agents and landlords in the private rented sector may have a tenant now claiming Universal Credit. So as a landlord or agent, what do you need to know?
You Need to Give Tenants a 'Landlord Letter'
There are some things that you, as a landlord or an agent, will need to do to help your tenants access Universal Credit. In order to qualify for Universal Credit, they will need a letter from their landlord verifying the rental amount, the address of the property they rent and the date when the tenant commenced. Without these details, they will be unable to make a claim.
Do your best to be understanding and work with your tenant to come up with payment solutions you’re both happy with. This is a worrying time for many and tenants who have lost their livelihoods and means to pay rent will be very worried about losing their homes as well.
Who's Eligible for Universal Credit?
Not every tenant will be eligible for Universal Credit - anyone with savings of £16,000 or more is not eligible to make a claim. They can apply for jobseeker’s allowance (JSA) of £74.35 a week but will receive no help with their rent. Where possible, consider a rent reduction or even a brief holiday from rent collection. Lots of banks are offering mortgage holidays and some rental income towards a mortgage is considerably better than nothing.
How Much is Paid through Universal Credit?
Even those who are able to qualify for Universal Credit might not receive a large enough amount to cover their entire rent. It’s difficult to provide precise figures as each person’s calculation is based on household income and makeup and the maximum rent claimable also varies according to local housing allowances.
Rents Should Be Calculated Monthly
Universal Credit is paid monthly, so if your tenant’s rent collection is on a weekly or fortnightly basis, you will have to recalculate the amounts. If rent is paid weekly, a monthly amount will be calculated by multiplying the weekly rent by 52 (weeks), then dividing by 12 (months).
What is APA (Alternative Payment Arrangement)?
Many tenants prefer to have the housing element of Universal Credit paid directly to the landlord so they can manage the rest of their finances themselves. This is called an Alternative Payment Arrangement - landlords should discuss this with their tenants and if they are in agreement, fill out a UC-47 form to apply for it. For private landlords, a Bank Automated Clearing System (BACS) payment will be paid into the bank account nominated by the landlord 7 days after the end of the claimants’ Universal Credit assessment period, going forward on a monthly basis.
14 May 2020 UPDATE: The Department of Work and Pensions (DWP) has launched a new online payment system to digitise its paper-based APA application process involving the use of the UC-47 form mentioned below. The new system was launched after a successful trial where the processing time was reduced from three weeks to just a few hours for some applicants. To access this portal please visit: https://directpayment.universal-credit.service.gov.uk/
Can Tenants Use Universal Credit to Settle Rent Arrears?
It is possible to use Universal Credit to settle rent arrears, but the maximum rate at which deductions for rent arrears can be made is 20% of the Universal Credit standard amount. The deductions can only be made for arrears relating to the claimant’s current address. If the claimant changes address, any deductions made will cease.
You Must Repay Any Overpayments
On the other side of the spectrum (however unlikely), if a landlord receives any overpayment of Universal Credit for their tenant’s housing cost, they must repay it otherwise legal action can be taken against them.
The situation with the global COVID-19 pandemic is constantly changing. While we at Fixflo will do our best to keep you updated as to changes in rules and regulations, it’s important to refer to current advice put out by your local council and the national government.
DISCLAIMER: This article is intended for information only. It does not constitute legal advice and Fixflo does not accept liability based on this article. Please note that the situation is evolving rapidly and readers are advised to follow the latest government guidelines in their regions.