Universal Tax Credit - Update May 2013

Landlords buckle up and prepare for a rollercoaster ride

This month sees the roll out of Universal Tax Credit in Tameside, Warrington, Oldham and Wigan; it is only a question of time before it is introduced into your area.

Whilst the original legislations intent is that alternative direct payment IS NOT to be offered to the Landlord, the latest circular from the Depart of Works and Pensions appears to have mellowed and a process called The Direct Payment Demonstration Project (DPDP) is currently under review. Key Points

In order to safeguard the claimant’s home, paying rent direct to the landlord will be the first priority where rent is part of the Universal Credit award.
This will be evidence based and the bias will be towards the Tenants not the Landlords needs [copies of rent arrears letters, rent statements. and Eviction Notices will be required]
Remember irrespective of the Tenants behaviour the council always tell the Tenants to stay put until they are evicted. So unless you secure direct payment your losses will be significant.

Where there are rent arrears

Issue a Section 8 Notice for rent arrears as soon as the Tenant owes two months’ rent [7 days after second missed payment due date constitutes two months rent arrears ] and also issue a Section 21 Notice (a good page to review is Compare Tenant Eviction Notices ) – this then makes the person vulnerable to homelessness; therefore the council will be more willing to consider direct payment
There are no guarantees you will secure direct payment, so it is imperative to make sure that you have other preventative measures in place.

PREVENTION IS BETTER THAN CURE - SO PRUDENT MEASURES ADVISED

The best ways that Landlords can protect themselves and minimise their exposure to the changes resulting from the Universal Tax Credit are:

Make your first Tenancy for 6 months NOT 12 months for it is easier to evict using the Section 21 Notice rather than the Section 8 route.
Serve a Section 21 Notice at the Commencement of a Tenancy see Why Serve Section 21 Notice
Vet your Tenants better especially those on benefits - remember the rules for entitlement to Housing Benenfit changed 1 st April 2013 see changes LHA and current rates
Always ask for a Guarantor – see recovering loss from Guarantors
Ask for sight of bank statements and take copies
Member of PIMS should ALWAYS take advantage of the PIMS FREE Tenant Credit check report – you can find out if they have a CCJ or similar, then this itself demonstrates that the tenant has prior conduct in badly managing their financial affairs so securing direct payment will be easier
Remember we at PIMS can help members Evict Tenants, we can show you how to sue Tenants - we even provide a FREE Tenant Tracing Service but we can't show you how to get blood out of a stone. So refine your working processes use a Tenancy Application form, Credit check your tenants this is a FREE Service to PIMS Members, adhere to a good vetting process and ALWAYS ask for a Guarantor.
SERIOUSLY Consider leaving Tenants who are on benefits on periodic tenancies this is because with the revisions in the Welfare Act there is a significant increase in liklihood of Benefit claimaints rent payments becoming subject to Suspension overpayments and repayment of their LHA Housing Benefits

I don’t rent to DSS so “Universal Credit Doesn’t affects me”

The fact remains people lose their JOBS, Tenants claim Child Benefit, job seekers allowance, and Housing Allowance etc therefore Universal Credit is likely to affect you

About Universal Tax Credit for Landlords

Universal Credit is the unification of the benefits system (payment of Housing child benefit unemployment etc direct to the Tenant) read more

Universal Credit for local authorities updates – 2013

Information about Universal Credit for claimants has been published onto the GOV.UK website and this will be updated regularly. This site includes the new online Personal Planner, which helps claimants prepare for Universal Credit. Claimants who have questions about Universal Credit can be sign-posted to this information.