Universal Credit is a government paid benefit payment which is paid to people over the age of 18 but under pension age who are on a low income or out of work. Universal Credit can include a payment towards rent. Typically, Universal Credit is paid to the claimant a month in arrears. In the event of there being problems with paying the claimant directly it is possible for the rent portion of universal credit payments to be paid directly to the landlord. This would normally be done under an alternative payment agreement.
Changes are being made to the process though, to change how rent arrears payment are paid to landlords.
Under the current system a landlord can apply for a direct payment of rent and this typically occurs 7 days after the claimants assessment period has ended. This simply means that once the landlord has applied for direct payments and the current period of payments to the claimants has ended, the payments will be made directly to the landlord 7 days later.
With rent arrears, however the system takes a lot longer. The landlord needs to apply for a creditor reference number from the department of work and pensions. Payments of the rent arrears can then take up to 9 weeks to process and be paid.
Under the new system, which came into effect in February 2022, the application for a direct payment process will stay mostly the same but any rent arrears payments will be processed at the same time as the direct rent payments. A landlord will no longer need to apply for a creditor reference number which will significantly speed up the process of starting to repay any rent arrears by reducing them to the same 7 days as for direct rent payments.
It is important to note that the new system will only be valid for new rent arrears claims and existing landlords who have a creditor reference number will still continue to be paid using the old system.
The changes to the way Universal Credit payments are made to landlords who are claiming for rent arrears payments is relatively small in the grand scheme but will significantly reduce the amount of time between applying for the payments and actually receiving them. Although the payments of rent and rent arrears will remain as separate payments, they will be processed in the same way and with the same speed, which is a significant improvement for landlords.