Caridon Landlord Solutions is calling on Boris Johnson to review the Benefit Assessment Period (BAP) of Universal Credit which is catching landlords and tenants.
It says landlords and tenants who do not understand the implications of coordinating the BAP of Universal Credit with the dates of their tenancy agreement are, in some cases, missing out on nearly a whole month's rent. CLS is calling on new Prime Minister, Boris Johnson, to review the process and make necessary changes.
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, however, this is where the problem lies because the UC payment is made monthly, whereas their previous legacy benefits might have been weekly which, for some, has led to issues with budgeting.
Sherrelle Collman, managing director of Caridon Landlord Solutions, said: “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 Alternative Payment Arrangement will cease. This is because of their tenant’s Benefit Assessment Period. We have helped more than 25 landlords with this issue in the last 2 months.
“So, let’s say a tenant’s 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."
Using the above example, if a tenant moved out of a landlord’s property on 30th May 2019, at the end of his/her BAP (7th June 2019) they are no longer that landlord’s tenant and will not receive any rent for that month. Unlike Housing Benefit, which is pro-rated between old and new landlord, in this instance, only the new landlord gains from the whole months’ rent if an APA is in play. This means, in many cases, the outgoing landlord can easily lose a whole month's rent.
Caridon Landlord Solutions argues that Universal Credit is a complex benefit and the Benefit Assessment Period is catching people out resulting in many tenants incurring arrears and losing their home.
Sherrelle concluded: “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."