In a letter to landlords today (19th Feb), the DWP has conceded to an issue with the way Universal Credit (UC) is calculated for social housing tenants – and confirmed changes are being considered.
As reported by 24housing, Community Housing Cymru (CHC) National Housing Federation, Scottish Federation of Housing Associations and Northern Ireland Federation of Housing Association challenged the DWP over the 53-week rent year.
On the announcement, Will Atkinson, CHC Policy and Programmes Manager at Community Housing Cymru, said: “We welcome the commitment from the DWP towards solving the 53-week rent year issue, ensuring that UC claimants living in social housing receive full support for their rent next year.
“The Housing Benefit system was designed to ensure that people on low incomes can afford to pay their rent, and UC currently failing to cover this basic requirement for tenants.
“CHC has proposed that the UC regulations should receive a small amendment, ensuring that the 53rd week’s rent is covered by monthly UC payments, and we are working with the Department to discuss how this can be implemented.”
UC is paid on a monthly cycle. Where a tenant has a weekly rental liability, they will have to make either four or five rent payments in any one month.
This means that claimants are ‘overpaid’ by UC in months where they have to make four rental payments and ‘underpaid’ where they make five – but over time this broadly balances itself out.
It is regarded as impossible to accurately align weekly and monthly payment cycles at all points in time.
No year contains 53 weeks. Landlords who charge rent weekly on a Monday every five or six years seek 53rd rent payments in a year, with the 53rd payment in part covering the tenancy for the first few days of the following year because of the way the calendar falls.
Where a tenant makes a 53rd weekly rent payment on the last Monday of the 2019/20 year, only two days of that payment relates to a liability falling within that year – for example, payment covering Monday and Tuesday of that week as Wednesday falls in the new year.
So, five days of that payment is effectively an advance payment for the following month, and that month has only four Mondays and four rent payments.
The combination of the advance rent payment and the ‘overpayment’ in April 2020 means that the shortfall is immediately recovered.
As of today, the DWP has recognised there is a separate issue with regards to the way the calculation in the UC regulations converts a weekly liability into a monthly allowance.
The conversion is achieved by multiplying the weekly rent by 52 and then dividing by 12.
This effectively means one day’s rent a year (two days in a leap years) is not covered by UC.
The DWP is now considering whether this formulation around weekly rents, and potentially other weekly amounts in the UC calculation, should be amended.