I may well be late to the party here, but a couple of specific issues with Universal Credit have been pointed out to me that I, at least, had not heard before. So, in case I am not alone, I pass these on. They both amount to a significant departure from the ‘legacy benefit’ position and therefore a restriction on housing costs payable.
The Universal Credit Regulations 2013 contain certain exclusions from the housing element of Universal Credit.
1. Ground Rent
Schedule 1, s.3 of the Regulation expressly excludes ground rent.
Payments excluded from being rent payments
3. The following are excluded from being “rent payments”—
(a) payments of ground rent;
The Government’s justification for this, in the passage of the Regulations was, and I don’t even paraphrase, ‘well it isn’t very much’.
Granted this was before the extent of the leasehold ground rent scandal became apparent, with high initial ground rents, and large rates of increase in ground rents. But that strikes me as a remarkably blasé assumption by the DWP there. Did anyone both to look into it at all?
Obviously, for someone faced with a fairly high ground rent – over £1000 pa, say – who finds themselves on Universal Credit, whether employed or not, this is going to be a significant problem (and one that could result in ground 8 possession proceedings where the lease is actually an assured shorthold).
2. Mesne Profits
As you may have noticed in the passage from the parliamentary briefing, mesne profits are also excluded as housing costs, as not included in Schedule 1 para 2. Unless mesne profits can somehow be classed as ‘payment for a licence or permission to occupy’ (Sch 1, 2 (b)) then they are not payable under UC, even if demanded by the ‘landlord’.
(Mesne profits are what is demanded from the occupier of a property when the landlord does not accept that the occupier has any right to occupation – it is, in effect, the ‘profit’ the occupier has made. In most tenancy cases, it would be the equivalent of the rent.)
This may produce some serious issues.
For example, a social landlord decides that a tenant is not occupying as their primary or only residence. A notice to quit is served, terminating a contractual tenancy (as it is alleged to be), followed by possession proceedings based on that NTQ. From the point of the expiry of the NTQ, mesne profits are demanded, but the landlord has the intention to and then does seek possession. Mesne profits in those circumstances would be hard to describe as a licence fee or payment for permission to occupy.
And then the matter comes to trial and the tenant wins, the possession claim is defeated and the tenants security of tenure established. Then what? What of the arrears over the months, maybe many months between NTQ and trial?
Similar issues would arise for, say, those people occupying after the death of a tenant where there is no permitted successor. While notice and possession proceedings play out, mesne profits are demanded, but are they for a licence or permission to occupy? That seems hard to accept where steps to gain possession are underway.
Both these exclusions seem to me to be ill thought out and short sighted. The Govt’s stated view at the time only confirms that everyone should have a housing lawyer with them at all times (and listen to them). As the roll out of UC continues, these exclusions will inevitably cause some serious problems, and quite possibly cause people to lose their homes.