Exclusive: Universal Credit payment delays leave landlords in limbo

Landlords renting to Universal Credit tenants are being warned of potential payment inconsistencies in light of recent changes by the government.

The Chancellor Jeremy Hunt unveiled plans to unfreeze Local Housing Allowance (LHA) which will increase to the ‘30th percentile of local market rents’.

Despite promises of increased housing support for low-income renters starting from April 1st, 2024, many landlords are still receiving payments based on the old rates, despite the government’s pledge.

Why am I still being paid the old rate?

Mick Roberts, one of Nottingham’s largest landlords to house benefits tenants, says his tenants are still being paid on the old rate.

He told Property118: “I’ve been undercharging my benefit tenants for years and trying to look after them with cheap rents.

“There was a sigh of relief when the new LHA rates were introduced and promised on the 1st of April 2024.”

He added: “However, some landlords including myself are now being paid and thinking why am I still being paid the old rate?

“My tenants are ringing me who get paid on the 13th of April and who have their award notification from UC to say they are still being paid the old rate.”

Payments won’t kick in until after the tenant’s first BAP

Bill Irvine, a universal credit expert, says payments based on the new rates won’t kick in until after the tenant’s first Benefit Assessment Period (BAP).

In a blog post, Mr Irvine explains while the government announced the increase effective on April 1st, the actual payment adjustment follows a different timeline.

He says it’s not straightforward, especially for UC claimants, and has created a helpful timeline to demonstrate:

• Tenant A claims UC and has a benefit assessment period (BAP) running from 15th March to 14th April, normally paid 7 days later, on 21^st.

• Normal rule is; when a change in circumstances occurs (e.g. child is born, starts new job, experiences a higher salary, moves address, adds a partner) the change takes effect from the first day – 15th March, so any increase/reduction in his/her award would apply from 15th March -14th April; paid 7 days later on 21st April.
• However, for the purpose of the annual benefits uprating order, the approach is different. The increase, for example, to the tenant’s personal allowance, child additions etc., takes effect on, the first BAP, starting on or after 8th April. So, if the tenant’s BAP starts on the 8th his/her new award will cover 8th April – 7th May, with payment made on the 14th of May.

• Whereas claimants with BAPS running from the 1st– 7th April will need to wait until the start of their next BAP before they realise the higher award. So, using the 1st as an example, that claimant’s higher award will be based on their BAP – 1st May – 30th May, paid on 7th June!

Delay in payments

Mr Irvine explains many universal credit tenants will receive a delay in payments.

He told us: “Most private landlords were delighted when the Chancellor confirmed the unfreezing of the LHA rates from April after a four-year wait.

“Because the LHA changes are subject to the Rent Officer’s order, the example relating to Tenant A above, applies to both his personal and “housing costs element.

“So, where private tenants have a BAP starting, between the 1st to 7th, they will have to wait until 7th-14th June before they receive their first payment at the higher rates.”

Another reason some landlords will refuse to take UC tenants

Mr Roberts says the confusion will cause many landlords to simply not rent out to benefit tenants.

He said: “This will be another reason some landlords will refuse to take UC tenants.

“It’s just one more factor that adds to our concerns and may ultimately lead us to reconsider our tenant selection process, perhaps opting for higher-earning non-benefit tenants in the future.”

When approached by Property118 for comment a spokesperson from the Department of Work and Pensions said: “Our increase to the Local Housing Allowance rate means that 1.6 million private renters on the lowest incomes will be around £800 a year better off.

“This is on top of the over £30 billion we are investing in housing support this year, while our Discretionary Housing Payments provide a safety net for anyone struggling to meet their rent or housing costs.”

“The increase to the Local Housing Allowance rates from April 2024 applies to the ‘relevant Monday’ in a new Assessment Period for UC claimants following the start of the new tax year.

“This aligns to Universal Credit (UC) benefits uprating which also comes into force from the start of the first Assessment Period beginning on or after the first Monday of the tax year.

“As UC is a monthly assessed benefit that is paid in arrears, a claimant will receive their newly uprated benefit award and their increase to LHA at their first full Assessment Period that follows the change.”

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