House of Commons Library

Housing costs in Universal Credit

Published Monday, January 1, 2018

This Commons Library briefing paper explains the key differences between assistance with housing costs under the Housing Benefit regime and under Universal Credit. The paper considers evidence of the impact of claiming housing costs under UC to date and the Government response.

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UC replaces several benefits with one payment

The Welfare Reform Act 2012 and associated regulations provide for the replacement of a number of benefits, including Housing Benefit, with a single payment of Universal Credit (UC). The roll-out of UC, having been delayed several times, is now due to be complete in 2022. Following changes announced as part of the Autumn 2017 Budget, the roll-out plan was revised but there was no change to the final roll-out point.

Detailed provisions setting out how housing costs will be calculated under UC were set out in the draft Universal Credit Regulations 2013 published in December 2012.  The regulations were considered by the Social Security Advisory Committee (SSAC) – the Committee’s report was published alongside the draft regulations in December 2012. The Regulations were subject to the affirmative resolution procedure, meaning that they had to be approved by both Houses of Parliament. The Universal Credit Regulations 2013. (SI 2013/376) came into force on 29 April 2013.

Comparisons with Housing Benefit

The calculation of entitlement to assistance with rent payments is similar to the current Housing Benefit system. However, there are some significant differences. The default position is that UC is paid direct to claimants as a single monthly sum – claimants are responsible for ensuring that the housing cost element is paid to the landlord to cover the rent due. This involves a behavioural change for most tenants of social landlords. Alternative Payment Arrangements and budgeting assistance may be available in certain circumstances where claimants struggle to adapt.  In addition, there is a one month assessment period meaning that claimants may have to wait at least 5-6 weeks before receiving a payment.

Implementation - evidence of impact on rent payments

The roll-out of UC to date provides a basis on which the impact of claimants applying for UC can be assessed. In relation to the housing costs element, there are significant concerns about the impact of waiting periods and other delays on rent arrears, particularly in short-term temporary accommodation. On 23 November 2017 the Government announced that the 7 day initial ‘waiting period’ would be removed from February 2018.

Following what it described as “compelling evidence of the problems in the rollout of Universal Credit in its recent follow ups” the Work and Pensions Select Committee re-launched its inquiry into UC in February 2017. The inquiry was not concluded before Parliament dissolved on 3 May 2017 but evidence submitted indicated issues around rent arrears and hardship experienced for those claiming UC. The then Employment Minister, Damien Hinds, responded to several issues raised in a letter of 1 March 2017. He pointed to the fact that some claimants had had rent arrears before claiming UC, and said that newly arising rent arrears were expected to be of a short duration.

The roll-out of UC was the subject of a Westminster Hall debate on 19 April 2017 led by Catherine McKinnell MP for Newcastle upon Tyne North.  Damien Hinds responded, again pointing to evidence of pre-existing arrears but acknowledging that there had been some delayed payments to claimants.

Work and Pensions Committee inquiry into the roll-out of UC

The Work and Pensions Committee opened an inquiry into the roll-out of UC on 12 September 2017 - written evidence was initially accepted up to 19 October 2017 but has been extended to 9 January 2018 as the Committee is now seeking evidence on self-employment and UC.

An oral evidence session held on 13 September 2017 saw witnesses representing public and private sector landlords express concerns about growing rent arrears and levels of tenant debt. On 21 September Damian Hinds wrote to the Committee setting out developments in relation to a Universal Credit Landlord Portal for social landlords, and advising that all social landlords will be offered the opportunity to acquire Trusted Partner status. This scheme allows landlords to identify vulnerable tenants and be paid rent directly before falling into arrears. Social landlords have welcomed this move. Private landlords are also interested in acquiring Trusted Landlord status.

On 26 October 2017, the Work and Pensions Committee published a report on the “baked-in” 6 week wait for UC, which it described as a “major obstacle to the success of the policy.”  The Committee recommended that the Government reduce the standard waiting time for a first UC payment to one month. 

Pressure to pause or halt the roll-out

On 18 September, the Chair of the Work and Pensions Select Committee, Rt Hon Frank Field, called on the Government to pause the roll-out of UC, saying:

Evidence from the first three Universal Credit boroughs shows they have amassed £8m in rent arrears, with more than 2,500 tenants in London claiming Universal Credit so far behind with their rent they are at risk of eviction from their homes. 

We are hearing evidence of people being plunged into all sorts of vulnerability as a result of the debt, risk of hunger and homelessness, and resulting stress of being migrated onto Universal Credit, with its in-built 6 week delay in receiving a first payment and much longer waits for many people.

Following an Opposition Day debate on 18 October 2017 the House of Commons agreed by 299 votes to nil an Opposition motion calling on the Government to “pause” the roll-out of the UC Full Service.  All Conservative Members, with the exception of Dr Sarah Wollaston, abstained. 

The day before this debate, the Secretary of State, David Gauke, wrote to Frank Field setting out some detail on dealing with housing costs within UC and developments in relation to advance payments, alternative payment arrangements, and the position of private landlords.

Landlords' priorities for improvements

The day before this debate, the Secretary of State, David Gauke, wrote to Frank Field setting out some detail on dealing with housing costs within UC and developments in relation to advance payments, alternative payment arrangements, and the position of private landlords. Social landlords’ priority areas for improvement include:

  • Further improvements in processing times so people get the correct money in the first assessment period
  • Rollout of the landlord portal and Trusted Partner status
  • Better customer service and routes to escalate urgent issues
  • More efficient system for payments direct to the landlord in full service
  • Better support for tenants to make and manage their Universal Credit claims including advance payments

Private landlords are seeking flexibility to enable more direct payments to landlords and are interested in access to the landlord portal and Trusted Partner status. There is evidence to suggest that private landlords are reluctant to let to prospective tenants who would be reliant on UC to cover all or part of their rent payments.

'A balanced package of improvements' Autumn Budget 2017

On 23 November 2017, David Gauke announced what he described as “a balanced package of improvements that puts more money into claimants’ hands earlier, ensuring extra support for those who most need it.” This included the removal of the seven day waiting period and new guidance for staff “to ensure that claimants in the private rented sector who have their housing benefit paid directly to landlords are offered that option when they join universal credit.” 

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