Universal credit to support payments to landlords

In response to questions from shadow work and pensions minister Stephen Timms, Chris Grayling this week said the Department for Work and Pensions would have the capability to make payments to landlords or social and private tenants from the start of universal credit in October 2013.

Under universal credit a range of existing benefits – including housing benefit – are to be combined into a single payment. The government has made clear it wants the payment to go to tenants as a default option, rather than allowing the housing element to go to their landlords.

This has raised concerns in the social and private housing sectors. Landlords fear the change could lead to an increase in arrears, and in the case of housing associations damage their credit ratings making it more expensive for them to borrow money to build new homes.

Private landlords have set up a petition urging the government to switch payments of the housing element of universal credit from tenants to landlords if the tenant falls behind on their rent.

Responding to written questions in parliament, Mr Grayling also said the government would use an agreement with Citibank to make universal credit payments to people who do not have bank accounts.

The DWP signed a contract with Citibank last year to provide over-the-counter welfare payments at PayPoint outlets to replace cheques.