Court of Appeal rules against DWP on universal credit case
- Published: Tuesday 30 June, 2020
- By: Nicola Eaton
Tenants in receipt of Universal Credit and their landlords have received some good news from the Court of Appeal.
Four working mothers who receive universal credit originally brought a case, in January 2019. The women challenged the government on the fact that universal credit payments, for those with monthly salaries, are paid erratically because weekends and bank holidays are not taken into consideration.
Where individuals are paid monthly, sometimes two paydays would fall within the same universal credit ‘assessment period’. If this was the case, the Department of Work and Pensions (DWP) would conclude that income had doubled within the month and as such slash the benefit payment.
As a result, affected parties can be left with significant financial loss. This, in turn, can lead to fundamental problems in providing for themselves and their families – including falling into rent arrears.
One of the women in part time employment, saw her universal credit payment cut by nearly 93%, from approximately £900 to £65, where her only other income amounted to £776 per month.
This financial distress rendered the woman unable to pay rent and forced to make use of food banks.
In 2019, when the case was originally heard, the High Court found in favour of the women, but the government launched an appeal.
The Court of Appeal has now also heard the case and the government appeal has been dismissed.
In dismissing the government’s appeal, it was found that the government had acted irrationally and unlawfully.
Where many critics questioned why the government had launched an appeal in the first place, there is solace to be taken from an announcement by DWP minister Will Quince, who confirmed that the government would appeal to the Supreme Court.
Speaking on the matter, Quince said:
"We do however recognise the budgeting issues this may have caused and we are now assessing remedial options."
The number of people affected appears to be unclear; Mr Quince said that because payments increased the month following the drop many were not. Government estimates show the issue affected 1,500 people.
However, Stephen Timms, chairperson of the Commons work and pensions committee painted a very different picture of the impact, saying that 85,000 people had been identified by the court as having been affected.
Will Quince has not outlined a deadline for getting the necessary changes in place, nor has he confirmed whether back-payments will be made.
Wales, Scotland and Northern Ireland housing markets re-open
All parts of the UK have now re-opened their housing markets in full or in part. Northern Ireland sales and lettings recommenced on Monday 15th June, Wales made a partial re-opening on 22nd June and Scotland is re-opened on 29th June.
As of 22nd June the Welsh government partially re-opened the housing market. Home moves are allowed, but restrictions apply.
The property must currently be empty and have been empty for the previous three days, or, the property must have had a deep-clean prior to the new residents moving in.
New build properties are subject to the same health and safety rules.
Those moving from Wales to England are able to do so, but those moving from England to Wales must following the restrictions described above, in terms of moving in to a property that has been vacant for 72 hours, or has been deep-cleaned.
Valuations in Wales re-commence
Valuations are now also possible, for both occupied and unoccupied properties, but rules around social distancing and safe working practices must be adhered to.
Letting and estate agents are now able to re-open. Properties for sale or rent can now be marketed, but where properties are occupied, viewing are not permitted. If a property is empty, viewings are allowed.
The first minister for Wales, Mark Drakeford spoke on the subject:
“The threat of coronavirus hasn’t gone away but thanks to the efforts we have all made over the last few months, the number of people contracting coronavirus each day in Wales is falling, so too is the risk of meeting somebody with virus.
“Given the progress we have made, we are able to take some additional cautious steps to further unlock our society and economy.”
Holiday lets in Wales
Self-catering holiday lets will be able to accept bookings from Monday 13th July, which will be welcome news for Welsh holiday let landlords, who had previously faced a summer shut down.
Northern Ireland’s steps to re-open their housing market stipulate caution and restrictions related to Covid-19 health safety for all involved.
In her announcement on sales and lettings, the first minister for Northern Ireland, Arlene Foster, highlighted the important role that the housing industry has in the economy:
“The real estate industry has the highest multiplier effect in the economy and I’m therefore pleased to announce that our Coronavirus Regulations will be amended to permit house moves for the sale of homes from Monday 15 June.”
Guidance for home-movers, provided by the Northern Ireland Executive, is available via this page of their website.
Holiday lets in Northern Ireland
Self-catering accommodation opened from 26th June in Northern Ireland. Tourist attractions, hotels, bars and cafes re-open on 3rd July.
Scotland was the last of the UK nations to take steps to re-open their housing industry.
From Monday 29th June, letting and estate agents could re-open and house moves became possible.
The Scottish Government has a route map describing the over-arching plans for their Covid-19 Phase 2 rollout, which you can find here.
Holiday lets in Scotland
Self-catering accommodation has an indicative re-opening date of Friday 3rd July, when restrictions on travel distances are also due to be relaxed.
Outdoor hospitality is set to follow this on 6th July, with indoor hospitality and other leisure premises not targeted for re-opening until July 15th.
Average voids at 5-week record high
Statistics produced by ARLA Propertymark, professional and regulatory body for letting agents, show that rental void periods have reached a record high at an average of 5-weeks.
In February 2020, pre-Covid-19, the gap between one tenant leaving and another occupying a rental property was significantly lower, at an average of 3-weeks.
During lockdown home moves and viewings halted, which has driven the increase.
Over the last 12 months, the statistics around void periods have been reasonably stable at 3 weeks on average. The only exception was December 2019, when voids went up to a 4-week average.
Tenant demand maintained
The number of new tenants looking for property in the month of May was at its highest this year, at 70 per branch. Last year, this number was 69, but the year before that it was 60.
North East England has seen the highest number of prospective tenants looking for property in May, at 88 tenants per branch. Wales and South West England experienced lowest demand, at 61 tenants per branch on average.
Properties managed by branch
Before lockdown, the number of properties that ARLA Propertymark agent branches were managing stood at 201. Post lockdown, this increased to 208, but this is the same volume as was the case in May 2019.
Average length of tenancy unchanged
The May statistic for length of tenancy is the same as it was in 2019, at an average of 19-months. In Scotland, tenancies were the shortest on average for the UK, at a year and one month. The East Midlands and Wales enjoyed the longest average tenancy length at an average of 2-years.
Rent reductions in May 2020
May’s figures for rent reductions, negotiated by tenants with their landlord, went up to 2.5%. This is the highest this figure has been since March 2019, where is reached 2.9%.
6% of tenants in London negotiated a rent reduction in May, contrasted with 1% in the North West.
Rent increases in May 2020
ARLA Propertymark also shared information on rent increases. According to their data, only 14% of the organisations letting agents reported rent increases being made by landlords on their books. This is the lowest percentage recorded on record.
By contrast, in February of this year, 41% of agents reported that rent increase were made. In May of last year, this statistic sat at 45%.
The reduction in the volume of landlords increasing rents is significant. It illustrates of the efforts that
landlords are going to, to accommodate the financial difficulties being faced by tenants as the result of Covid-19.
David Cox, chief executive of ARLA Propertymark shared his observations on his organisations May 2020 report:
“Our latest figures show that landlords and agents have been taking the brunt of the pandemic. They are aware of the financial difficulties facing tenants and have shown empathy with many landlords not increasing rents where they otherwise might have needed to. As we continue to move forward, it’s important that everyone aims to keep the rent flowing in order to sustain the market and help boost the economy following several months of uncertainty.”
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.