Law News

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

Em Morley - July 30, 2019

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.”