This article from UC expert Bill Irvine was first published on his website, UC Advice & Advocacy Ltd on 8th October 2021, It is reproduced with permission.
The problem
By far the majority of Universal Credit (UC) tenants’ hand over their “housing costs element” (HCE) to their landlord to avoid the risk of rent arrears and legal action.
Concern exists, however, in those cases, where the tenant doesn’t hand over the funds, intended to reduce or extinguish their rent liability, and the Department for Work and Pensions (DWP) fails to either implement Alternative Payment Arrangement (APA) requests for Managed Payments and Third-Party deductions without, in many cases, offering any justification OR permit the APA, only to withdraw it weeks/months later, for no good reason.
Currently, APAs apply to only 5% of PRS tenancies. The figure was 7% before lockdown so has dropped, during the same period rent arrears in the private sector have trebled.
Contrastingly, around one-third of Social Rented Sector (SRS) tenancies have “Managed Payments” (Direct payments) in place. These stats, produced by DWP, show, PRS landlords are clearly not abusing the scheme, as sometimes implied by DWP. If anything, they’re being deprived access by DWP “Service Centre” staff who, in my opinion, are poorly informed, particularly in relation to “housing costs”, and often avoid engaging in discussion with landlords or all too frequently, prematurely end calls, by citing DPA or GDPR restrictions.
Applying for Alternative Payment Arrangements (APA)
When PRS landlords do apply for APAs, it’s usually where the tenant is not using the HCE, as it was designed, to offset their rental liability.
Cases where, more than 2 months arrears are evidenced (representing 60% of all APA awards), should invariably produce a favourable result, just as they do in the social sector, when councils and housing associations apply, using their dedicated online portal.
But expectations are often dashed, by DWP simply not complying with its own scheme rules, and when challenged, resisting offering any explanation or providing feeble excuses.
Only today, I received a referral from a PRS landlord (a member of the NRLA) whose application was refused because the tenant “declined” the application. The need for tenant consent was removed in 2018, yet more than 3 years later, its staff are still operating a policy which its hierarchy conceded was “indefensible”.
A mere ‘civil matter’. Or the root cause of the problem?
DWP repeatedly lecture landlords (mainly private) on the fact, payment of rent is a contractual agreement between tenant/landlord and that in the event the tenant doesn’t use the HCE appropriately, it can’t become involved in what it considers, “purely a civil matter”.
Yet, DWP’s failure to comply with its own scheme, and the objectives of Parliament, is the root cause of the presenting problem.
Landlords are aware of the contractual relationship between themselves and their tenants and their mutual obligations in this respect. They are also aware that BEFORE pursuing legal action they MUST exhaust all alternatives, one of which is applying to the APA scheme, which was designed by Parliament to avoid the need for legal action and protect the interestds of both tenant and landlord.
Looking at the law
In a recently published House of Commons report, dated August 2021 at page 12 it suggests –
“The current version of the guidance on Alternative Payment Arrangements was updated in May 2020. Some of the safeguards the DWP has developed to mitigate potential risks to tenancies and landlords’ income streams resemble current arrangements within Housing Benefit for claimants living in the private rented sector. For example, it is possible to pay the rent to landlords on behalf of claimants in arrears.”
If you examine the Housing Benefit & UC guidance manuals, both produced by DWP, you’ll find the UC, “Tier 1 factors”, are very similar to the “safeguarding rules” which apply to the LHA scheme.
Where they differ:
- a) HB recognises landlords as “persons affected” and share information with both PRS and SRS landlords.
- b) Councils acknowledge a landlord’s application for redirection and process it within days/weeks.
- c) On receipt, HB staff are required by caselaw {R (H) 2/08} to suspend payment, where necessary, pending a decision on the outcome of who should be paid.
- d) Each party (tenant & landlord) is allowed to present their views & evidence before a decision is made.
- e) Where there’s a dispute, HB remains in suspense until an outcome is determined, sometimes by a Tribunal judge.
Regrettably, in UC cases, far too many cases are refused, without any explanation being afforded the landlord.
Some are awarded, but later redirected back to the tenant, at their request, even though the circumstances which justified redirection remain, and there’s been no opportunity afforded the landlord to object.
Some have been redirected to the tenant, through fraudulent misrepresentation (e.g., their landlord has changed when they haven’t) but no sanctions have been imposed on the delinquent tenants.
Amber Rudd comments
Ex-Secretary of State, Amber Rudd, claimed she was sympathetic to the PRS landlord’s position. She is quoted in the HOC report at the foot of page 13 where she states:
“One third of UC claimants in social rented housing have their rent paid directly to their landlord. But in the private sector, that number is only 5%. People in the private rented sector already face a far higher risk of losing their tenancy, and I know from talking to claimants and landlords that the current system isn’t working for some of them. So, we need to make it easier for tenants in the private sector to find and keep a good home, by giving landlords greater certainty that their rent will be paid.”
A total failure to compensate for avoidable losses
Many of my PRS landlord clients who have been complaining about these inequities for the past 8 years, would wholly agree with this statement. However, the problems still exist and when complaints of maladministration are pursued, they’re invariably upheld by the Independent Case Examiner yet, not one landlord has been properly compensated, for their wholly avoidable rental losses. In contrast, the Local Government Ombudsman, dealing with housing benefit “direct payment” complaints, often fully compensates the rental loss, caused by the Council’s mistakes.
And finally
In a report recently produced by the NRLA, focused on rent arrears and the difficulties being experienced by UC claimants, its spokesperson commented –
“Practical steps can and should be taken to ensure those tenants in receipt of benefits can cover their rents.”
I wholly agree with those sentiments but, would argue, the issues raised in this article, should be tackled first, as they’ve been around for years, with little or no progress being achieved and are more likely to produce a favourable outcome.
Bill Irvine
UC Advice & Advocacy Ltd
www.ucadvice.co.uk
