Universal Credit will eventually replace Housing Benefit for the majority of working-age claimants in Northern Ireland. While some accommodation will continue to be assessed under Housing Benefit, all private tenancies will eventually come under the Universal Credit system.
The first claims for Universal Credit began in Northern Ireland in September 2017. The first area to start using Universal Credit was Limavady. All new claims for rental assistance by working-age claimants will be assessed under Universal Credit by September 2018. From then, the Department for Communities will being moving existing benefit claimants over to the new system and this process is scheduled to complete by 2022.
Differences between Universal Credit and Housing Benefit
While the amount of help that a tenant receives with housing costs will be largely the same under Universal Credit as it is under Housing Benefit, there are a few key differences in how the benefits are processed that will affect private tenants.
- The assessment period is one calendar month, rather than one week, and payments will be made once a month
- Typically, it will take 5 weeks from the date that a tenant makes a claim before the first payment will be received. Tenants can apply for an advance payment if this delay causes financial hardship.
- By default, payments will be made directly to landlords, but the claimant can ask to have the money paid to him or herself
- While all Housing Benefit payments are made on fixed days in a month, the date of each Universal Credit payment will depend on when the tenant originally made his or her claim
- Landlords will no longer have to complete a Certificate of Occupation, but the tenant would need to show liability by providing a rent book, tenancy agreement or written letter confirming the tenancy in order to get help with their rent.
- Tenants will not be eligible for help with rates under Universal Credit and will have to make a separate application for rates rebate in order to get financial assistance with this charge
- Tenants will no longer be entitled to receive their full rental amount for a 13-week period if they need to apply for Universal Credit and haven't done so in the last 12 months. Instead, they will immediately move into the LHA system
- Landlords will be able to apply for direct deductions from the tenant's Universal Credit claim where the tenant owes rent arrears
How can landlords prepare for Universal Credit?
Tenants claiming housing costs through Universal Credit will have to prove that these costs are legitimate. They'll need to provide a rent book, tenancy agreement or a written letter confirming the tenancy. If they can't provide any of these, it could cause a delay of payment, and increase the risk that they fall into arrears. It's recommended you ensure your tenants have all the relevant paper work.
Landlords should also ensure that they have provided their tenants with a valid email address. Tenants who are getting Universal Credit and who want to get assistance with their rates will need to make a separate claim for a rate rebate. They will have to provide their landlord's name, telephone number and email address in order to make this claim.
If your tenant claims rates rebate, you will receive an email asking you to create a rates rebate account. You will have to do this online via the NI Direct website. Once you set it up, your online account can be used to verify the tenancies of any claimants who have applied for rates rebate and to see how much money has been paid into your ratepayer account in respect of these claimants.
Working out shortfall payments
As Univeral Credit housing costs payments will be made monthly, it will be much easier for landlords to work out how much additional money tenants have to pay in order to cover their full monthly rent. Landlords who are used to working shortfall payments out on a four-weekly basis, should remember to adapt their calculations for UC claimants for whom they will be getting a payment once every calendar month.
- Sarah is claiming Housing Benefit and receives £42.15 each week. Her rent is £190 a month. During the course of a year, Sarah's landlord will receive 13 payments of Housing Benefit from the Housing Executive in respect of Sarah's tenancy. Every four weeks, Sarah's landlord receives £168.60 from Housing Benefit and Sarah pays her landlord £21.40 each month to make up the difference. Sarah will be entitled to keep the 13th payment of Housing Benefit as she has already covered her full year's rent with combined payments of rent in advance, 12 payments of Housing Benefit and 12 shortfall payments of £21.40.
- Michael is claiming Universal Credit at the same LHA rate as Sarah. His rent is also £190 a month. As his payments are made monthly, Michael's landlord receives £182.65 each month from Universal Credit and Michael only has to pay a shortfall of £7.35 to his landlord to cover his full rent.
Working out shortfall payments can be a headache. It's important to reconcile exactly what money you have received from the tenant, including any rent paid in advance, with what the tenant was legally obligated to pay according to the terms of the contract. If you need help reconciling your rent payments, contact Landlord Advice.