Universal Credit: Housing

Department for Work and Pensions written question – answered on 12th February 2019.

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Photo of Lord Kennedy of Southwark Lord Kennedy of Southwark Opposition Whip (Lords), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Housing)

To ask Her Majesty's Government what plans they have to acknowledge and take account of 53 week rent years for recipients of Universal Credit.

Photo of Baroness Buscombe Baroness Buscombe The Parliamentary Under-Secretary of State for Work and Pensions

No year contains 53 weeks. This perceived issue arises where a landlord charges rent weekly on a Monday and, because of the way the calendar falls every 5 or 6 years, seeks 53 rent payments in a year, with the 53rd payment in part covering the tenancy for the first few days of the following year.

Universal Credit is paid on a monthly cycle. Where a tenant has a weekly rental liability, they will have to make either 4 or 5 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 impossible to accurately align weekly and monthly payment cycles at all points in time.

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 (ie payment covering Monday and Tuesday of that week as Wednesday falls in the new year). Thus, five days of that payment is an advance payment for the following month and that month has only four Mondays and hence four rent payments. The combination of the advance rent payment and the ‘overpayment’ in April 2020 means that the shortfall is immediately recovered.

There is a separate issue with respect to the way the calculation in the Universal Credit 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) are not covered by UC. We are currently considering whether this formulation around weekly rents, and potentially other weekly amounts in the UC calculation, should be amended.

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