Posts with tag: Universal Credit

Government announces end to benefit payments freeze

Published On: November 5, 2019 at 10:06 am

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end to benefit payments freeze

The government has now confirmed that the freeze on benefit payments, announced in the 2015 Budget, will end in 2020. The Department for Work and Pensions has announced that working-age benefits, such as Universal Credit and Jobseeker’s Allowance, will rise by 1.7% from April 2020.

Work and Pensions Secretary Therese Coffey said: “We’re clear the best way for people to improve their lives is through work, but we know some people require additional support.

“Our balanced fiscal approach has built a strong economy, with 3.6 million more people in work since 2010. And it’s that strong economy which allows us to bolster the welfare safety net by increasing benefit payments for working-age claimants now.”

Responding to this announcement, Jon Sparkes, Crisis Chief Executive, said: “Everyone across Britain should be able to rent a safe, affordable home where they can build their lives from. So, it’s extremely disappointing to see the government’s commitment to lift the freeze on housing benefit fall short of enabling people to afford to keep their homes. 

“Right now, families on the lowest incomes are facing agonising stress and anxiety because they cannot afford to pay their rent. This is made all the worse when we know it doesn’t have to be this way. Our research shows that by investing in housing benefit, so it covers the true cost of rents, government could lift more than 35,000 children out of poverty.

“Putting families at risk of homelessness cannot be allowed to continue. We can make renting affordable for everyone, but we need to see all parties commit to investing in housing benefit rates, so they cover at least the cheapest third of rents across the country. The time for action is now.”

It is estimated that the benefits increase will cost £5bn. Ministers have stated that this decision to end the freeze will help 10 million people.

Should housing benefit increase in line with UK rent prices?

Published On: October 10, 2019 at 8:17 am

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Did you know that today is World Homeless Day? This is an awareness day that takes place around the world on 10th October in order to change the lives of homeless people in their local communities.

As such, Crisis and The Joseph Rowntree Foundation are calling on the Government to invest in Local Housing Allowance (LHA), the housing benefit aspect of Universal Credit. This is due to the opinion poll published today, which shows 75% of respondents agree that housing benefit should increase if rents go up.

A survey was commissioned by the charities and conducted by Public First. Over 4,000 UK adults were involved, with 76% responding that housing benefit is a practical way for Government to stop people experiencing homelessness in the first place.

Housing benefit was originally designed in 2011 so that people on low incomes could afford the cheapest 30% of private rentals in their area. However, there has since been a lack of investment and a four-year freeze since 2016. The rates now fall woefully short of the true cost of renting, which continues to rise in many parts of the country. 

Research published by Crisis earlier this year shows that housing benefit shortfalls have led to little to no affordable private housing in many areas across the UK. The charity believes that this is pushing thousands of individuals and families to the brink of homelessness.

Jon Sparkes, Chief Executive at Crisis, said: “A safe and stable home is fundamental to our dignity and humanity. But every day, we hear of people losing their homes as the constant pressure of rising living costs become impossible to bear.

“The Westminster Government has committed to reduce homelessness, but without addressing the root causes such as unaffordable rents, homelessness will continue to rise. Housing benefit is an important tool and could be the quickest and most effective way to prevent homelessness in the short term, but it is fundamentally flawed because of severe under investment. Ending homelessness is truly within our capabilities and government must act now to deliver on its promises.”

Darren Baxter, Housing Policy and Partnerships Manager at The Joseph Rowntree Foundation, said: “A home should be an anchor against being swept into poverty but for many families the cost of renting a home is adding an extra strain. 

“It does not have to be this way. We can ensure housing costs do not push households into poverty if we invest in building the low cost rented homes and, in the short term, invest in housing benefit so that it reflects the real costs of renting.”

RLA: Pay Universal Credit Directly to Landlords to Stop Rent Arrears

Published On: September 24, 2019 at 8:31 am

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RLA: Pay Universal Credit Directly to Landlords to Stop Rent Arrears

The Residential Landlords Association has come out in support of the position that tenants receiving Universal Credit (UC) should have the right to choose whether the housing element of the benefit is paid directly to their landlord. They agree with the findings of a Smith Institute report commissioned by Southwark Council. 

Southwark was at the forefront of the rollout of full service UC, and therefore has a longer period of data to back up the findings of the report. The reports found that there is ‘a noticeable decrease’ in the levels of rent arrears for those claiming UC in 2018 when compared to 2016 and puts this change down to the earlier and increased use of alternative payment arrangements (APAs).

The report adds: “Originally designed to apply to a handful of cases, more than 40% of Southwark tenants claiming UC have now entered into APAs with the council to help manage their finances”.

Under current rules, landlords may apply for an APA, but only after two months of rent arrears have accrued.

David Smith, Policy Director the Residential Landlords Association, said:

“Our own research finds that over half of landlords with tenants on Universal Credit have seen them fall into rent arrears in the last year.

“Today’s report demonstrates that arrears are lower under direct payments to landlords and supports our call for the Government to give all tenants on Universal Credit the ability to choose to have the housing element paid directly to their landlord.

“Many tenants feel more comfortable with managing their finances knowing that their rent is paid and it should be up to them to be free to make that decision.”

Investment in housing benefit could save thousands from homelessness

Published On: September 2, 2019 at 9:09 am

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A new report from Crisis released today supports the belief that investment in housing benefit would prevent thousands from becoming homeless.

Crisis believes that restoring the levels of housing benefit, otherwise known as Local Housing Allowance (LHA), could make a massive difference.

If it truly covered the costs of market rents, housing benefit has the potential to prevent more than 6,000 households from being forced into homelessness. It could also lift more than 35,000 children in the UK out of poverty in the next three years.

The research, conducted by Alma Economics, outlines the three-year cost and benefit analysis of a Government investment of £3.3 billion in LHA for immediate net benefits of £2.1 billion. Crisis is calling for £820m in the next year as part of upcoming spending decisions.

The charity believes that lifting the benefits freeze and investing in LHA would help thousands currently close to becoming homeless by covering the costs of the cheapest 30% of market rents.

It would also help those already homeless to afford a rented home and significantly reduce the number of families and individuals turning to their local councils for help. In turn, this would reduce the need for homelessness services and extremely expensive temporary accommodation.

Alongside the immediate net benefits of £2.1bn over the three years, this would also give the Government time to build a sufficient supply of truly affordable housing in the years to come whilst ensuring that homelessness across the country doesn’t continue to rise.

LHA is the housing benefit aspect of Universal Credit, providing support to those on low incomes who are unable to meet the cost of private rent. LHA rates were originally set to ensure the recipient could afford the cheapest third of properties in their area, meaning most were able to access a safe and stable home to build their lives in. 

However, there has been a series of cuts to LHA over the years, including a four-year freeze from 2016. This has led to rates failing to keep up with the cost of rents in most areas across the country, meaning safe, affordable housing is becoming increasingly difficult to find.

With families and individuals often accumulating debt having to make up the shortfall between their LHA and rent, this mounting financial pressure means they are easily forced out of their home and into homelessness.

Crisis is now calling on the Government to commit to restoring the LHA rates so that they cover the true cost of rent.

Jon Sparkes, Chief Executive of Crisis, said: “Everyone in our society should have the means to rent a safe, stable home where they can build their lives. But every day at Crisis, we hear of the agonising stress and anxiety people face, unable to afford their rent and keep the roof over their head.

“Right now, people are losing their homes and being left trapped in homelessness, unable to get back into adequate housing. We have to stop this happening.

“The UK Government has made commitments to end rough sleeping and reduce homelessness, but without addressing the root causes behind homelessness, it will sadly continue to rise.

“Long-term solutions like building more affordable social homes will take time so in the meantime, investing in LHA, so it covers the true cost of rents, provides the quickest and most effective opportunity to help those already homeless back into housing and for thousands more, prevent it from happening in the first place. 

“Over the coming weeks, we urge the Government to prioritise investment in Local Housing Allowance as part of its upcoming spending decisions – this research makes a clear-cut case that doing so will have an immediate financial and human impact. Ending homelessness for good is truly within our capabilities but will only be made possible by taking steps like this.”

Terrie Alafat CBE, Chief Executive of the Chartered Institute of Housing, said: “The Chartered Institute of Housing is pleased to join Crisis and so many other organisations in calling on the government to restore local housing allowance to cover the most affordable 30% of rents.  

“It is a national shame that thousands of families face being made homeless and councils are spending £1 billion a year on temporary accommodation because LHA is failing to do its job. Addressing this issue will bring the government significant savings in the benefit bill, as well as giving some of our most vulnerable fellow-citizens a more secure environment in which to live.

“A staggering 97% of private rents in England are currently simply unaffordable under benefit rules. This leaves thousands of families having to choose between paying their rent and feeding their children. The social and economic cost of this broken system simply cannot be justified.”

Universal Credit still forcing tenants into rent arrears, RLA research shows

Published On: August 28, 2019 at 9:13 am

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Universal Credit is causing tenants to fall behind with their rent, according to new research for the Residential Landlords Association (RLA).

The report shows that 54% of private landlords involved with the research who have let to tenants on Universal Credit in the past 12 months have seen them fall into arrears. Of this number, 82% said that the arrears only began after a new claim for Universal Credit or after a tenant had been moved over to the new system from housing benefit. 

68% of landlords found there was a shortfall between the cost of rent and the amount paid in Universal Credit.

Private landlords with tenants claiming Universal Credit can apply to have the housing element paid directly to themselves when a tenant has reached two months of rent arrears. This is known an Alternative Payment Arrangement (APA).

However, the RLA’s research highlights that it took landlords an average of almost 8.5 weeks for an APA to be arranged. This is leaving them with almost four months of rent arrears before they begin to receive they rent they are owed.

Among landlords with tenants in receipt of housing benefit, 62% said that they were worried that their tenants might not be able to afford to pay their rent when they migrate to Universal Credit. 

36% of landlords said that they had buy-to-let mortgage conditions preventing them from renting to benefit claimants.

The RLA is calling on the Government to do more to prevent rent arrears occurring in the first place including:

  • Giving all tenants from the start of a claim for Universal Credit the ability to choose to have the housing element paid directly to their landlord
  • Ending the five-week waiting period to receive the first Universal Credit payment
  • Ending the Local Housing Allowance freeze to ensure it reflects the realities of private sector rents

According to the most recent statistics, 45% of households receiving Universal Credit with support for housing costs are in the private rented sector.

David Smith, Policy Director for the RLA, said: “Today’s research shows the stark challenges the Government still has in ensuring Universal Credit works for tenants and landlords.

“The system only provides extra support once tenants are in rent arrears. Instead, more should be done to prevent tenants falling behind with their in the first place.

“Only then will landlords have the confidence that they need that tenants being on Universal Credit does not pose a financial risk that they are unable to shoulder. Without such changes, benefit claimants will struggle to find the homes to rent they need.”

Boris Johnson Called on to Review Universal Credit System Catching out Landlords and Tenants

Published On: July 30, 2019 at 8:21 am

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Certain landlords and tenants are at risk of missing out on a whole month’s rent, according to Caridon Landlord Solutions (CLS).

Those who do not understand the implications of coordinating the Benefit Assessment Period (BAP) of Universal Credit with the dates of their tenancy agreement could potentially be caught out.

CLS is now calling on Boris Johnson, now that he has been made our new PM, to review this process and make the necessary amendments.

Universal Credit consists of several elements, which make up a claimant’s entitlement. If a tenant receives financial aid to help pay their rent, then the Housing Cost Element (HCE) of Universal Credit will cover this. Tenants are expected to pay landlords directly, but this is where the problem lies. Universal Credit payments are made monthly, which may be a significant change for those whose previous legacy benefits were made weekly. For some, this has led to issues with budgeting.

Sherrelle Collman, Managing Director of Caridon Landlord Solutions, says: “With the old Local Housing Allowance system, Housing Benefit was administered in line with a claimant’s date of application, however, this is not the case with Universal Credit. 

“There are occasions when landlords will not receive their tenant’s Housing Cost Element, even though they believe that they are entitled to do so, and the APA (Alternative Payment Arrangement) will cease.  This is because of their tenant’s BAP (Benefit Assessment Period). We have helped more than 25 landlords with this issue in the last two months.”

The assessment period for a Universal Credit claimant begins from the date their entitlement begins. Claimants do not receive their first payment until seven days after the first assessment period has ended.

The subsequent payments will then be received after each assessment period on the same day of the month – one month and seven days.

CLS has provided this example:

  • The first day of the BAP will be the date on which the claim is made, e.g. 8th May
  • The last day will be the day before this on the following month, e.g. 7th June
  • Payments are then made 7 days after the end of the BAP, e.g. 14th June

Sherelle explains: “So, let’s say a tenant’s Benefit Assessment Period (BAP) runs from 8th to 7th of each successive month, with payment made up to 7 days later (14th).

“If a change of address is reported during the course of the BAP, even on the last day (7th), it is deemed to have happened on the first day of the assessment period.  In some cases, this can be favourable as the new landlord will gain a whole month’s rent. However, in other cases this can be an issue as the old landlord will lose out and lose a whole month’s rent.”

So, taking into account the above example, if a tenant had moved out of a landlord’s property on 30th May 2019, at the end of his/her BAP (7th June 2019) they would no longer be that landlord’s tenant and will not receive any rent for that month. This means that only the new landlord gains from the whole months’ rent if an APA is in play, unlike Housing Benefit’s pro-rated system between old and new landlord. In many cases, the outgoing landlord can easily lose a whole month’s rent.

CLS highlights that Universal Credit is a complex benefit and the BAP is catching people out resulting in many tenants incurring arrears and losing their home.

Sherelle also added: “Establishing a tenant’s BAP is very important. If you’re aware of the rule and the dates of your tenant’s BAP you can make arrangements to ensure neither you, nor your tenant, are disadvantaged.  For example, by ensuring the Tenancy Agreement dates fall in line with those of the BAP.”