13,000 tenants in Wales at risk of UC underpayment

Community Housing Cymru calls on UK Government to change UC formula to account for year-on-year flexibility.

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Community Housing Cymru (CHC) says as many as 13,000 tenants in Wales could be underpaid rent by one week due to the way the current Universal Credit (UC) system is set up.

Now, CHC is calling on UK Government to change the formula for calculating UC to account for year-on-year flexibility with the number of rent weeks and rent levels – to ensure every rent payment is covered.

“If the system stays as it is, tenants will need to find other sources of income, and if they can’t find the money they will fall into arrears, through no fault of their own,” said Will Atkinson, CHC Policy and Programmes Manager.

The issue arises out of most social landlords collecting rent each Monday – and in the rent year 2019/2020 there will be 53 Mondays.

This circumstance reoccurs roughly every five years due to a normal year being 52 weeks and one day and a leap year 52 weeks and two days.

Under the Housing Benefit system, this does not pose an issue, as housing costs are paid weekly.

But UC payment cycles are monthly, and the Housing Element of UC is calculated by multiplying weekly payments by 52 and dividing by 12 – leaving claimants being unable to claim for the additional 53rd week of rent through the UC housing element.

To CHC, this means over 13,000 social housing tenants currently claiming UC across Wales will be one week short and will have to find at least £50 – or up to £125 for larger households – from other sources to make their rent for the 53rd week.

The personal allowance of UC is only £58.10 per week for someone under 25 and the issue will also affect PRS tenants who pay their rent on a weekly basis.

CHC is proposing an amendment to the UC regulations, so the new formula for calculating the monthly housing element of UC is the total annual rent owed, divided by 12.

This, said Atkinson, will fully support tenants, regardless of the number of rent weeks in the year divided by 12.

“The Housing Benefit system was designed to ensure that people on low incomes renting their homes can afford to pay their rent on a weekly basis. Its replacement, Universal Credit, is currently failing to cover this basic requirement or tenants.

“We are calling on UK Government to change the formula for calculating Universal Credit, to ensure that every rent payment is covered.

“This simple change would enable UC payments to flex year on year with the number of rent weeks and rent levels.”

CHC cites Bron Afon Housing Association – with around 1,500 tenants currently claiming UC and around 200 new tenants being added each month.

If all of them were affected by the loss of one week’s rent, using an average payment of £94.48, then it would mean that tenants would have to find an additional £378,000 due to the UC regulations.

Trivallis anticipates approximately 700 tenants claiming UC by the end of the coming financial year.

If all of them were affected by the loss of one week’s rent, using an average payment of £90, those tenants would have to find an additional £63k due to the UC regulations.

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