Bedroom Tax Loophole Closed

Government officials have acted to stop social landlords using a Universal Credit regulation to protect their income from the impact of the bedroom tax.

A number of landlords had spotted a little-known clause in complex benefit regulations that allows them to collect the rent shortfall resulting from the bedroom tax for tenants in arrears.

The use of the regulation does not protect tenants from the bedroom tax, as the money is still deducted from their overall Universal Credit award. However, it means that landlords do not have to collect the shortfall in benefit from the affected tenants.

Under the regulation, landlords ask the DWP to take the entire gross rent cost straight out of the tenant’s overall Universal Credit claim, if it is deemed to be in the claimant’s best interest. The regulation is used alongside an Alternative Payment Arrangement, under which housing costs benefit is switched to the landlord when a tenant is in two months of rent arrears.

The latest letter from the DWP, sent to a social landlord requesting to use the regulation at the end of September, says official Universal Credit policy is to “pay up to the amount of the housing costs element”.

“The amount of the manual landlord payment managed payment cannot therefore exceed the amount of the housing element the claimant is entitled to.”

The Chartered Institute of Housing had suggested the regulation could be used as an alternative to chasing tenants for rent.

A DWP spokesperson said landlords will not receive additional government money to make up bedroom tax rent shortfalls.