During it’s preparations for the rollout of Universal Credit, six projects have been testing various aspects of Universal Credit including direct payment to landlords when arrears accrue.

The legislation allows for direct payment to landlords in certain circumstances and guidance issued in February 2013 indicated that direct payment was going to happen and certain trigger events for direct payment were currently being tested.

Currently much of the testing is with social landlord providers and in particular, they are testing:

  • different levels of support social sector tenants may need to move to direct payments of housing benefit, such as advice on managing personal finances and budgeting
  • the exemptions that need to be in place for direct payments
  • payment switch-backs to landlords if a tenant falls into arrears
  • the support to help tenants in arrears to payback their arrears and potentially to return to direct payments
  • early intervention switch-backs before arrears reach trigger points

The six projects are:

  • Dunedin Canmore Housing Association in Edinburgh, working in association with The City of Edinburgh Council
  • Oxford City Council and Oxford Citizens, (part of the) Greensquare Group, Southern England
  • Shropshire Unitary County Council and Bromford Group, Sanctuary Housing and The Wrekin Housing Trust, West Midlands
  • Southwark Council and Family Mosaic, London
  • Torfaen County Borough Council and Bron Afon Community Housing and Charter Housing, Wales
  • Wakefield Metropolitan District Council and Wakefield and District Housing, Northern England

The DWP has now announced three levels of protection:

  • Decisions about whether tenants should receive direct payments will be made in collaboration with social landlords
  • If arrears build up to the equivalent of 1 month’s rent the decision to make direct payments will be reviewed
  • If arrears reach the equivalent of 2 months rent, the claimant will have housing payments switched to the landlord

Although this decision seems to be aimed at social providers, there seems no reason why the same principles won’t apply to the private sector.