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DWP responds to 53 week rent year issue 07/03/2019 Labelled as Rent, Tenants

Following earlier publication of guidance by the LGA on rent issues in 2019/20 arising from 53 Mondays falling in that particular financial year and the impact on Universal Credit entitlement for tenants, at a recent meeting with DWP officials held to update and consult sector representatives regarding implementation of Universal Credit, the issue of the 53-week rent year was again discussed. However, the DWP stance remains largely unchanged.

 

Universal Credit is paid on a monthly cycle, but most social landlords charge rent on a weekly basis. The DWP's stance is that where a tenant has a weekly rental liability, they will have to make either 4 or 5 rent payments in any one month. This means that claimants are technically 'overpaid' by Universal Credit in months where tenants have to make four rental payments and 'underpaid' where they make five rental payments. But over time this broadly balances itself out and DWP points out that it is impossible to accurately align weekly and monthly payment cycles at all points in time.

 

No year contains 53 full weeks but DWP recognises that landlords charge rent weekly on a Monday and, because of the way in which Mondays fall in the annual calendar, every 5 or 6 years a 53rd rent payment falls due in a year, with the 53rd payment in part covering the tenancy for the first few days of the following year because of the way the calendar falls.


Where a tenant makes a 53rd weekly rent payment on the last Monday of the 2019/20 year, only two days of that payment relates to a liability falling within that year (i.e. payment covering Monday and Tuesday of that week as Wednesday falls in the new year). Thus, five days of that payment is an advance payment for the following month and that month has only four Mondays and hence four rent payments. DWP's stance is that the combination of the advance rent payment and the 'overpayment' in April 2020 means that the shortfall is immediately recovered.


However, the Department has recognised that there is a separate 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 (two days in a leap years) is not covered by Universal Credit. DWP is currently considering whether this formulation around weekly rents, and potentially other weekly amounts in the Universal Credit calculation, should be amended. 

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