Universal Credit could face an overhaul over an issue that housing associations warn will lead to thousands losing out on a week’s rent.

The pledge from the Department for Work and Pensions (DWP) comes after campaigners demanded action to close the "bizarre" and "unfair" loophole last month.

The problem hits council and social housing tenants who pay rent once a week.

Many will make 53 rent payments in 2019/20 because the financial year has 53 Mondays. Yet they are due the same amount of Universal Credit as if they paid 52 weeks, because the six-in-one benefit is calculated differently.

DWP officials at first insisted there are "no plans" to change the system because it would be too "complicated".

But now, in a newsletter to landlords, the DWP has said: "We are currently considering whether this formulation around weekly rents, and potentially other weekly amounts in the UC calculation, should be amended."

A DWP spokesman confirmed: “While our policy has not changed, we continue to listen to feedback about Universal Credit and work with claimants and landlords to review how the system is working.”

The problem, raised by the NHF and first reported by Inside Housing, is expected to affect Universal Credit claimants who pay weekly rent once every six years.

The NHF says that because UC is paid monthly, it is calculated using a formula that effectively takes 52 of a claimant’s weekly rent payments and divides the total by 12.

But there are 52 weeks plus one day in each year. That means every six years or so, a tenant has to make 53 rent payments, not 52.

Housing associations say the issue will come to a head in 2019/20 because ‘rent day’ is usually Monday, and the year has 53 Mondays.

Rochdale Boroughwide Housing expects 2,951 tenants to lose out by an average of £76 each, while Bolton at Home expects 4,000 to lose out by £75 each.

The DWP admitted in its newsletter: "The Department has recognised that there is [an] issue with regards 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 (2 days in a leap years) are not covered by UC."

Catherine Ryder, Head of Policy at the National Housing Federation, told the Mirror last month: "It’s a really serious situation. This whole mess is entirely avoidable.

"Ministers have to act now to sort it out."

Read More

Latest UK politics news

Source: Read Full Article