Chris Norris, NRLA Director of Policy and Practice on proposed changes to Universal Credit system that will make it easier and faster to reclaim arrears.
Any landlord who has ever been through the process of reclaiming rent arrears via the Universal Credit (UC) system will know that it can be a slow, and ultimately frustrating process.
It can also at times appear nonsensical, with direct rent payments for tenants in arrears arriving weeks or even sometimes months before corresponding arrears payments.
The reason for this apparently is as pedestrian as the approach favoured by the Department for Work and Pensions (DWP) for dealing with creditors, and the time taken to process payments to all of their creditors.
Rent payments it would seem are made using a relatively efficient, process providing BACS payments around seven days after the claimant’s assessment period ends. Whereas repayment of arrears has followed a completely different process which can take up to nine weeks – even when corresponding rent payments are being made to the same landlord weeks earlier.
Until now a landlord claiming arrears has been assigned a creditor reference number and entered into the department’s creditor payment cycle, which is independent from the managed rent payment process and timeline.
Improvements are on the way however, as the NRLA has learned that DWP is to introduce a new procedure in the next few weeks - no fixed date has been provided but it is believed roll-out will be during February 2022 – which will put arrears payments on a par with rent payments made direct to landlords. Under this process, arrears payments will be calculated at the same time as direct rent payments, at the end of an assessment period allowing for much swifter payments.
It is expected that new applications for rent arrears deductions made by private landlords will adopt the new mechanism, reducing payment time to approximately seven days following the claimant’s assessment period – mirroring the payment schedule for direct rent payments.
Unfortunately, existing claims, where a landlord has already been assigned a creditor reference number by DWP will continue to follow the existing system.
Landlords facing difficulties in managing arrears, or in need of advice can read more about the process and the support available here.