Can you pursue monies owed by tenants through Universal Credit?

Hi Don

Unfortunately this can only be done while the tenant is still a current tenant, it can not be done once the tenant has moved on and is then a former tenant. (Even if the tenant/former tenant is agreeable to this).

The monies deducted from a claimant's benefits and paid to another person (e.g. the landlord) to pay off their rent arrears, is called a "third party payment" (TPP). The TPP for paying off rent arrears is set at £3.70 per week, and it will only be paid if the tenant has at least 4 weeks rent arrears (unless certain other criteria apply).

However, if the rent includes an element for gas, electricity, and water, then it is possible to apply for these ongoing "service charges" to be deducted from the tenant's benefits and paid direct to the landlord. This is separate to, and over and above, the £3.70 pw off the rent arrears.

For landlords who have HMOs where gas, electricity, and water, are part of the service charge, then this can make a huge difference, because this is very difficult to get from the DSS tenants otherwise. In my portfolio of HMOs, the TPPs amount to around £2000 every 4 weeks, which I would otherwise struggle to get from my DSS tenants. It also means that once this is in payment it helps to protect the tenant from falling into further rent arrears which would lead to eviction. Thus, these TPPs are preventing eviction and homelessness.

It is my understanding that the TPP for Universal Credit cases can be a higher percentage of the claimant's benefits, than it is under the old regime so that standard £3.70 pw figure may be more generous under the Universal Credit regime. (but I've not yet had a UC case to test this out on).

Hi Rob,
Many thanks for your comprehensive input and clarifications on this matter, it is greatly appreciated.

It is slightly bewildering that the Government does not provide some means - within the benefits system - whereby ex tenants can be held accountable for previous debts within that system, especially given a response I received from David Freud about a year ago stating that the Universal Credit system was aimed at giving claimants more responsibility over their finances, this is very laudable, however along with responsibility surely should come accountability.

If, as is the case at present, a tenant can run up debts, move on to a new tenancy to start again, all the time avoiding being pursued for the previous debts because of the costs involved and potential for not receiving any monies subsequently, such Tenants will never be held accountable for their misdoings.

However, if the benefits system incorporated measures for pursuing such debts from within the system itself then surely that would make such tenants truly responsible - and accountable - for their finances.

I realise that such a system would never happen because of costs involved however, court action is similarly expensive therefore maybe some "tradeoff" could be derived from Landlords to pay for the service - maybe a percentage of money retrieved each time.

Reply to the comment left by "Don H" at "27/10/2015 - 11:28":

I agree that tenants should be held accountable and that there should be a process within the benefit system for landlords to get deductions from benefits for debts owed by former tenants. I have mentioned this in several threads on this and other websites, but as most landlords don't even deal with DSS tenants, or they can't be bothered with the hassle, I get little support for this idea.

In terms of the practicalities of doing this, the process is already set up and working in relation to Council Tax debts and magistrates court fines, so it would be a very simple piece of legislation (a Statutory Instrument) that simply inserts "debts owed to former landlords" as one of the categories for which the DWP can make TPPs (direct deductions from benefits).

Reply to the comment left by "Robert Mellors" at "26/10/2015 - 22:13":

It is up to 10% of their UC. I have one in place atm.

How do you claim a third party payment?

Hi Charles

You write to the Third Party Payments Team at the DWP. There are different addresses depending on the postcode of your tenant, and the type of benefit they are receiving. Try putting "DWP TPP addresses" in Google and follow the various links to find the info you need.

Once you have the DWP TPP contact addresses, you then send them a request for third party payments. There is a form in the Third Party Payments Creditor/Supplier Handbook that you can use as a template for providing the DWP with the information they need to process your request. (However, individual offices may request slightly different formats, but this cannot be known until you start dealing with them).

Thank you.