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.