Managed payments from Universal Credit to benefit landlords

Tenants that fall into rent arrears will now have more of their Universal Credit payment sent directly to the landlord. The extra support is part of managed payments and the Department for Work and Pensions will now provide a landlord up to 20% of the cash normally provided to the claimant. This money will be used to address any rent arrears that is due, and this change will now cause even more people to struggle with providing food and other basic needs for their families.

This is a major change being implemented by DWP. With more tenants falling into arrears and facing eviction from their homes and flats, DWP has decided to increase the percent paid to both private and social housing landlords from 5% to 20%.

While this may help reduce the number of homeless people across the UK, it is bound to lead to more people struggling to buy food or groceries for their families. More families will also now fall into fuel poverty and have their heat or utilities disconnected. So this managed payments programme will cause many other hardships for tenants. While the increase in the funds sent to the landlord for rent arrears may solve one problem, such as reducing evictions, it will create many more hardships for tenants.

Managed payments will impact tenants

There will be a big impact to both tenants and landlords. Managed payments will break out a portion of the cash normally used for housing, and that portion of the benefit of UC will now go directly to the landlord for families or individuals in arrears on their rental costs. The government says this will also help increase fiscal responsibility, but many others question this new policy.

The amount deducted for housing payments can also change each month, which will make it even harder for struggling families to budget and plan properly. Department for Work and Pensions will set a minimum amount for paying arrears at 10%, and it may increase up to 20%. This is part of the early intervention programme established by DWP, and as a result the percent will increase if the tenant were to accumulate one or maybe even two months of rent arrears.

So the tenant will need to be aware of this change in deductions when they are planning for what bills and expenses they may pay in a certain month. Many experts say the amount of government financial support changing will cause hardship for families on the Universal Credit, and this is one more change to the scheme that claimant’s need to account for.

Not only will extra funds be sent directly to the landlord, but the managed payments system will also allow DWP to deduct future payments from the claimant so that the government can recover the rent arrears. So this means that the tenant may need to repay the government funds for any arrears over many weeks or even months, and during this time frame their payment from Universal Credit will be lower than expected.

Both social and landlords of private accommodations will benefit from the increase in managed payments to up to 20%. While it greatly reduces the risk to them in letting to certain families as they will now have more insurance of having arrears dealt with. So that is a positive of the DWP change to the Universal Credit system.

However, there are many concerns from housing experts, county MPs and charities that the increased amount paid to landlords as part of managed payments will cause a great number of families to stop paying other bills. So in other words, the concern is that mostly well off landlords will now benefit at the expense of low income tenants, so this further increases the disparity in income across the UK.