UC – Are you not being paid up to date when a tenant leaves?

Universal Credit Landlords – Are you not being paid up to date when a tenant leaves you? Apparently a lot of Landlords are coming across the below more often now and have been asking ‘How come I haven’t been paid for last house?’

As Universal Credit (UC) carries on spreading like some infectious disease, a lot of Landlords are not being paid when a tenant leaves them as the below explains how bizarre UC works their dates for tenants to save UC money and simplicity. Never mind Housing Law and making sure the tenant does the right thing helping tenant pay all rent owed at last house.

Plus overlap for two houses is not incorporated into the new UC system.

“Why has my tenant’s “housing costs” been cancelled retrospectively, when he’s still liable to me for rent”?

Firstly, the questions of liability to pay rent and your tenant’s entitlement to “housing costs” assistance are two entirely separate issues. However, there is a connecting link. Often times, the answer to the landlords’ question, lies in the fact, UC is paid monthly, in arrears, and UC incorporates what is known as the “whole-month rule” which effectively dictates, whatever the tenant’s circumstances are, on the last day of his/her Benefit Assessment Period (BAP) should be applied for the whole period.

So what’s the BAP and how does it operate?

The BAP is determined at the outset of the claim. For example, someone making an online claim today, could be awarded UC from the 29th of January to 28th February and would receive their first payment on 6th March 2020 (7 days later). Once established, the BAP and payment dates are consistent, every month, thereafter, both while the claim is live or when its reactivated, following a re-claim within 6 months of last award.

Using the BAP example above, let’s assume the tenant decides to give up his tenancy and moves to another landlord’s property on 25th June 2020.

To do so he/she must provide the landlord with notice, usually, of 1 calendar month.

If he does so, on the 26th of May, when do you think this would affect the “housing costs element” in his UC award?

Applying the whole month rule, DWP will cancel his “housing costs” element, at his current address, with effect from 28th May, even though he remains in occupation of your property until 25th June. However, he’ll be awarded housing costs, at his new address, for the whole of the 29th May to 28th June period as he’s considered to be living at the new address for the whole BAP, even though his occupation only started on 25th June.

If it’s possible to negotiate a date with the tenant, taking into consideration the BAP, the landlord should suggest, the departing tenant move to the new home on 28th of June or later. Doing so, would ensure payment of the housing costs for 28th May to 27th June would be still due at the old property.

Furthermore, if the landlord was receiving an APA (payment direct) he/she would still be eligible for the whole month’s award and avoid later being pursued for a “recoverable” overpayment, caused by nothing other than the application of this rule.

The same rule is equally important at the start of a new tenancy. For example, if you know the prospective tenant is claiming UC, with a BAP running from the 3rd to the 2nd monthly, and you agree the terms of tenancy from today’s date, he/she will be paid whatever his/her eligible “housing costs” are, for the whole month, 3rd January to 2nd February, payable on the 9th of February 2020.

So why does DWP use this “whole month rule?

It enables automation; avoids the need for DWP staff intervention and associated costs; need to, for example, apportion rent liability or rent increases, arising from the annual up-rating of rents; or costs involved with moving to a more/less expensive property. Where the change results in more UC being payable, the rule can produce a windfall, for the tenant, as the change is effectively backdated to the start of the tenant’s BAP. This, in theory, should help landlords secure payment of rent, at least in that month. The rub is, it can also work, just as easily, to the tenant and landlord’s disadvantage, making it less likely payment will be made.

Whilst it’s easy to see why DWP is attracted to the “whole month” approach, in terms of its simplicity, administration savings etc.

Situations like the ones I’ve just described above, can cause real difficulties for both tenants and landlords, as the rule rarely aligns itself with the tenant’s liability to pay rent. Nor is there any provision to cover “overlapping liabilities” such as, in the case of “two homes”, where, in terms of Housing Benefit, councils are permitted to pay for a 4 week overlap, effectively covering the period of notice.

People can keep up to date with fiasco’s like this on Bill Irvine’s https://universalcreditadvice.com/

Mick

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