It's been reported today that the government has made a “ change in policy ” and “ revealed that direct payments to landlords will now be allowed " by a ” tucked away “ policy change.

To further clarify the current position, this was not only legislated for 1 but guidance relating to direct payments when there are 2 months arrears was actually first published in February this year in the Universal Credit alternative payment arrangements guidance – 11 February 2013

This guidance explains personal budgeting support which includes:

Alternative payment arrangements for some claimants who genuinely cannot manage the standard monthly payment and where there is a risk of financial harm to the claimant or their family. This might include rent paid directly to the landlord …

The February guidance continues to explain alternative payment arrangements as being:

The move to a single monthly household payment will be a significant change to the way most benefits are currently paid so the following alternative payment arrangements will be available to help claimants who need additional support:

  • Paying housing costs (rent) directly to landlords.

Where there are multiple debts to multiple third parties, the guidance provides that alternative payment arrangements should be prioritised with landlords having first priority (which is simply following the requirements of the legislation)

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.

A landlord may notify the DWP:

To safeguard the claimant’s home, a landlord can notify Universal Credit asking for the housing cost element to be paid direct to them when a rent arrears 'trigger' has been reached. …

A rent arrears trigger is 'suggested' as being:

  • Claimant is currently in arrears for their rent of 2 or more months (DPDP learning to inform the arrears ‘trigger’ level)
  • Claimant has been evicted for rent arrears and/or failed a tenancy within the last 12 months.
  • Claimant is subject / threatened with eviction and / or repossession.
  • Claimant is not in arrears but may have been within the last 12 months and was subject / threatened with eviction and / or possession.
  • Consider the fact that the claimant may now be financially capable and able to manage their own financial affairs effectively.

Although it needs to be remembered that:

The Direct Payment Demonstration Project (DPDP) is testing different rent arrears trigger points that will inform the final trigger to be used in Universal Credit.

Therefore, the discretion as to when direct payment to landlords will be made is far from decided at this stage but it does suggest that similar provisions as to current levels may well be adopted.

The circular being reported today is simply summarising and adding to this earlier February guidance when it says:

Where vulnerability issues and/or arrears of rent are identified, the claimant will have an interview to gain a greater understanding of their circumstances, establish the level of budgeting support needed and whether an Alternative Payment Arrangement (APA) is appropriate. This includes paying rent directly to a landlord. More vulnerable claimants will be offered budgeting support and this will be arranged by the LA who will determine the level and frequency of support and who is best placed to deliver that support. The intent is that claimants become financially independent over time and the relevance of any APA reviewed. Additionally, Landlords can refer rent arrears cases to Universal Credit; those which are under 2 months rent will trigger Universal Credit to contact the claimant to discuss their non payment as part of the Personal Budgeting Support process, where as those with over 2 months arrears will be switched to direct rent payment automatically and relevant budgeting support activity arranged subsequently.