Housing benefit and universal credit

Issue 253 (August 2016)

David Simmons examines some of the complexities that can arise from the phased replacement of housing benefit (HB) by universal credit (UC).

Introduction

The phased roll-out of UC1 is predictably causing confusion and complexity for claimants, advisers and the benefit authorities faced with deciding whether claims for UC or for the ‘legacy benefits’ it is replacing can be made.

This article focuses on one aspect of the issue – the circumstances in which claimants living in UC ‘gateway’ or ‘full service’ areas can claim or retain entitlement to HB, or need to claim UC to get help with their rent. It explains the general rules which determine the question, and then sets out some examples which illustrate their application and the complexities which can arise.

The general rules

Claimants who live in a UC ‘gateway area’ can only claim UC if they satisfy a series of ‘gateway conditions’.2 If they do not satisfy the gateway conditions, they can make a new claim for HB or retain their existing entitlement to HB.

Between May 2016 and the end of September 2018, the gateway areas will gradually become ‘full service areas’ with no gateway conditions. Claimants who live in a full service area cannot make a claim for HB (unless they are over state pension credit (PC) age or the claim is in respect of specified types of supported accommodation).3

In both gateway and full service areas, anyone who claims UC cannot claim HB, and anyone entitled to UC is not entitled to HB (unless in either case, the HB is for specified supported accommodation).4 Where a claimant has claimed UC and satisfies the basic conditions of entitlement, any existing award of HB (other than for specified supported accommodation) terminates from the date of the UC claim.5 Where a claimant has wrongly claimed (but has not yet been paid) UC, complex rules allow a new claim for HB to be backdated.6

The following examples illustrate how the rules work. In all cases, assume the claimants are under PC age and are not moving from, or to, ‘specified supported accommodation’ for which HB remains payable.

Example 1

Claimant is in receipt of employment and support allowance (ESA) and moves into rented accommodation for the first time.

If the accommodation is in a UC gateway area, the claimant cannot claim UC because one of the gateway conditions is that he is not getting ESA and is not unfit for work. In these circumstances, he can claim HB for help with his rent. If the accommodation is in a UC ‘full service’ area, the claimant cannot claim HB. He must claim UC (instead of ESA and HB) to get help with his rent.

Example 2

Claimant is in receipt of income-based job-seeker’s allowance (JSA) and HB and moves into new rented accommodation.

If a claimant moves to accommodation within the same local authority area, she should be able to stay on HB without making a fresh claim (the change of address should be treated as a change of circumstances).7 This applies whether she lives in a UC gateway or full service area.

If, however, the claimant moves to a different local authority area, her existing HB award terminates. If her new accommodation is in a UC gateway area, she cannot claim UC as long as she is getting income-based JSA (this is one of the gateway conditions). She can, therefore, make a new claim for HB in respect of her new home. She could, alternatively, relinquish her claim for income-based JSA and claim UC instead of income-based JSA and HB. If the new accommodation is in a UC full service area, the claimant cannot claim HB and must claim UC (instead of HB and income-based JSA) to get help with her rent.

Example 3

Claimant transfers from HB onto UC.

This can happen where the claimant experiences a change in circumstances which prior to the introduction of UC would have prompted her to claim another ‘legacy benefit’ like income-based JSA (on becoming unemployed), income-related ESA (on becoming sick), income support (eg, on becoming a lone parent or a carer) or tax credits – eg, on having a first child. Such claims are precluded if she lives in a UC full service area, or lives in a gateway area, claims UC and satisfies the gateway conditions.8 The claim for UC triggers the termination of her HB award.

When the claimant makes a claim for UC, the DWP should notify the local authority which is paying her HB by sending them form MGP1 (LA) electronically. The local authority should then return the form to the DWP with details of the date the HB was terminated and of any HB payments made after the date of the UC claim. Such payments are treated as unearned income for UC purposes (rather than HB overpayments) and deductedinfullfromtheclaimant’s UCawardfor the monthly assessment period in which the payments are made.9 Other than that, the claimant’s UC award, including a housing costs element, is calculated and paid in the normal way– ie, monthly in arrears in respect of each assessment period, and normally directly to the claimant. Note that there is no seven-day ‘waitingperiod’ for claimants who were entitled to HB in the month before they claimed UC.10

The following problems sometimes arise when a claimant transfers form HB to UC.

  • The claimant may wrongly apply for a ‘legacy benefit’ rather than UC and then have to claim UC, causing delays and confusion in the transfer from HB to UC.
  • There is normally a gap of at least five weeks between the termination of the HB award and the first payment of UC, which may mean that a claimant is not able to pay any rent due in this period. In these circumstances, the claimant can request a repayable payment in advance at any time during the first UC assessment period.11
  • Communication delays and failures between the DWP and local authority may result in ‘duplicate payments’ of HB and UC housing costs for the same period. The HB payments are treated as income and deducted from the claimant’s UC (see above). They may be recovered as an overpayment of UC if they were not actually deducted from the claimant’s UC award for the assessment period in which they were paid. Note that they are not treated as HB over-payments, so there is no scope for arguing that they are not recoverable under HB regulations due to ‘official error’.
  • The DWP sometimes wrongly applies a UC ‘seven-day waiting period’. This can be challenged by contacting the DWP and referring to the regulation and guidance.12 The waiting period should then be ‘removed’ and arrears of UC paid.
  • There is no provision for ‘transitional protection’ for claimants whose UC housing costs are less than the HB they were getting (such protection will only apply to claimants transferred onto UC under ‘managed migration’, which is not due to begin until July 2019). This could happen where, for example, a claimant has two non-dependent sons aged 21 and 23 who are getting income-based JSA. There is no non-dependant deduction from HB, whereas there is a deduction (‘housing costs contribution’) of £138.74 per month from UC. The claimant could only apply for a ‘discretionary housing payment’ to cover the shortfall in UC housing costs.
  • UC housing costs for rent are paid by default to the claimant (even if HB was previously being paid directly to the landlord). The claimant would need to apply for an ‘alternative payment arrangement’ to secure direct payment to the landlord – eg, where there are rent arrears.

Please be aware that welfare rights law and guidance change frequently. Older Bulletin articles may be out of date. Use keywords or the search function to find more recent material on this topic.

  • 1. For details see the article in Bulletin 251 (April 2016) ‘Universal credit: full steam ahead
  • 2. See SI 2013 No.983 and subsequent Welfare Reform Act 2012 Commencement Orders
  • 3. Each Commencement Order introducing full service areas precludes claims for HB (subject to the exceptions listed) where a claimant could qualify for UC – see, for example, SI 2015 No.634 and SI 2016 No.407
  • 4. Regs 5 and 6 UC (Transitional Provisions) Regulations 2014 No.1230
  • 5. Reg 8 UC (Transitional Provisions) Regulations 2014 6 Art 3A SI 2013 No.983
  • 6. Art 3A SI2013 No.983
  • 7. The relevant Commencement Orders only preclude actual claims for HB, where a claimant could qualify for UC
  • 8. See article referred to in note 1 for more details
  • 9. Reg 10 UC (Transitional Provisions) Regulations 2014
  • 10. Reg 16A UC (Transitional Provisions) Regulations 2014. See also para 5(2.8d) of ADM memo 16/15
  • 11. Reg 17 UC (Transitional Provisions) Regulations 2014. See also article on ‘Universal credit advances’ in Bulletin 250 (February 2016)
  • 12. See note 10