Navigating Universal Credit: Insights from landlords on DWP processes
Introduction
The NRLA’s first quarterly consultation of each year typically focuses on Universal Credit (UC), Local Housing Allowance (LHA), and broader welfare issues. This blog post delves into the key insights from our Q1 2024 consultation. The aim is to highlight the experience of landlords dealing with the Department for Work & Pensions (DWP), and the evolution of the Universal Credit system.
Universal Credit
Universal Credit is a financial support mechanism designed to assist individuals who either may not be in work or are on low incomes. According to the latest English Housing Survey, 24% of private renters receive some form of housing support – up from 20% in 2017/18.
This rise is reflected within the NRLA membership: the proportion of NRLA member-landlords who have tenants with at least one household member who claims Universal Credit has also risen:
Chart 1: NRLA member landlords who let to Universal Credit landlords.
Chart 1 shows that the number of landlords renting at least one property to a household who has one member on Universal Credit has more than doubled in the past six years, jumping from 21% to 43%.
Universal Credit and tenant arrears
Each year, we ask landlords with UC-claiming tenants about their experience of arrears over the past 12 months.
Chart 2: The proportion of landlords with UC-claiming tenants reporting instances of arrears with those tenants.
Has the administration of housing element of Universal Credit improved?
Since the creation of Universal Credit, tenants and landlords have faced challenges with its administration. These include delayed payments, tenant arrears, and lengthy wait times for claims to be resolved. These have been documented in previous NRLA consultations.
While the downward trend in arrears is encouraging, it raises a question: Have we seen real improvements in UC administration, or are we simply moving past the backlog of Covid-related arrears?
One landlord stated, “Only one of my tenants claim UC and it took a long time (over 3 months) for the claim to be processed by which time the tenant is in arrears.”
Landlords were asked about the typical level of arrears accumulated before claims were resolved:
Chart 3: Weeks of rent arrears before resolution
The good news? Compared to 2023, arrears due to delays in the administration of UC are being dealt with more swiftly.
- Resolutions within eight weeks have increased seven percentage points, while cases taking longer than 8 weeks decreased by eight percentage points.
However, figure 1 shows that while some claims are being processed faster, for others significant issues remain:
Figure 1: Landlords waiting more than 6 months before tenant arrears were settled
Landlords helping with Universal Credit claims.
In previous years, landlords have reported helping tenants claim the housing component of Universal Credit. Since 2020, each year, more than half of landlords surveyed who had helped tenants described the process as either “difficult” or “very difficult.”
- However, in the 2024 consultation, this trend reversed, with fewer than half of landlords who have supported tenants finding the process “difficult” or “very difficult”.
- In contrast, there has been a growth in landlords who describe the process as “easy” or “very easy”.
Despite this improvement, nearly half of landlords still face challenges, highlighting the need for further improvements. One landlord described their experience with DWP as “sometimes smooth - sometimes downright obstructive – it depends on who is assigned the case.”
The impact of direct housing payments
The prospect of tenants falling into arrears due to UC administration issues, coupled with difficulties in dealing with DWP, has led some landlords to have a negative view of the experience of dealing with DWP.
Currently landlords can only apply for direct payments if any of the following conditions are met:
- The tenant has more than 2 months of rent arrears.
- The tenant is considered vulnerable or unable to manage their own rent payments.
- The tenant requests payments to be made directly to the landlord.
The NRLA asked all landlords (not just those presently letting to UC claimants) whether direct payment would make a difference in persuading them to let in this key housing segment:
Figure 2: Would direct payments to landlords encourage supply in this market?
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Figure 2 shows that while direct payments may not incentivise all landlords, the positive response from 40% and the potential to influence another 24% suggests it could result in an increasing number of properties available to UC-claiming tenants. For example, one landlord notes, “the current system deters me from UC tenants because I would want rent paid directly to me from DWP”.
However, while direct payments may be a pull for some, many comments highlight potential drawbacks. Issues such as tenants failing to provide sufficient evidence for their UC housing payments, fraudulent claims, or overpayments made by DWP can result in landlords being liable to return any direct payments received:
Impossible to get answers from them (DWP). Very frustrating and aware if my tenant has been overpaid it can land on me
I NEVER accept direct UC payment of rent. I cannot keep tabs on tenants and would not wish to have to refund rent because UC had been incorrectly paid (either because of DWP or tenant)
These quotes reflect a general dissatisfaction among landlords with the current system of direct payments and the associated risks. For many, these risks make them reluctant to accept direct payments which, ostensibly, should simplify the process for landlords and tenants while providing reliability and certainty.
Summary
The increasing number of NRLA members renting to UC-claiming tenants underscores the importance of efficient UC administration by the DWP. While there are positive signs, such as reduced resolution times for arrears, challenges remain. Key challenges include initial claim delays and the overall difficulty of the claims process. Addressing these issues could improve landlord satisfaction and increase housing options for UC-claiming tenants.
Additionally, while direct payments provide greater certainty for some landlords, the comments suggest a need to improve the system of direct payments. The challenge for DWP is in getting the right payment out at the right time. A fully functioning direct payment process in which all parties have confidence could offer a more reliable and attractive option for landlords – this will ultimately benefit tenants as well.
