As I travel the country explaining to landlords and letting agents the likely impact of the welfare reforms on their businesses, the questions most commonly raised relate to LHA Direct Payments and what is commonly known as the 'safeguarding' provisions. Landlords and agents alike unsurprisingly want to know - 'will safeguards exist and, if so, how will they operate under Universal Credit?'
I firstly explain that Government's original stance was to 'pay the tenant' and only in limited circumstances (less than 10% of cases) would payment by 'exception' be re-routed to the landlord on a time-limited basis. To reinforce the point, the Universal Credit draft Regulations 2012 make no provision for re-routing; with Government maintaining it would base its 'exceptions' provisions on the outcomes of the six Demonstration Projects currently running in different parts of the UK.
But on 5th February 2013 Government revealed a more welcoming new insight into its future plans in its response to 'The House of Commons Work and Pensions Select Committee's third report of Session 2012-13' www.dwp.gov.uk/docs/uc-wpsc-response.pdf
It made the following commitments:
a) 'UC payments will be switched to landlords where claimants are in arrears or fall into arrears' and
b) 'Full guidance' will be provided on both the 'financial' and 'vulnerability' factors that will trigger direct payment; and
c) 'We are clear that UC must be designed in a way that protects the financial position of landlords'.