Universal Credit – A Guide for Landlords

What is Universal Credit?

Universal credit supports people who receive a low income or are unemployed.

Universal credit is a monthly payment that replaces:

• Housing Benefit
• Working Tax Credit
• Income Support
• Child Tax Credit
• Jobseeker’s Allowance
• Employment and Support Allowance

Universal credit is intended to be simpler than the current system of benefits and tax credits.

The amount of Universal Credit that a claimant may be entitled to will depend on their circumstances and household income, and as with the previous system, claimants must make the Tax Credit Office aware of any changes to their household/income.

Universal Credit, Tenants and Landlords

The Housing costs element of Universal Credit goes direct to the benefit claimant, who is then responsible for managing their own rent payments.

Universal credit is paid directly to the claimant’s bank, building society or credit union account,; beforehand it could be paid to a post office card account for those who do not have bank accounts. It is a monthly payment, where previously the various benefits may have been paid weekly, fortnightly or 4 weekly.

There is a fear that this could make it more difficult for the claimant to handle their money, as they will receive one large sum, rather than smaller sums throughout the month. If you find that your tenant is struggling to pay their rent in full each month, you may wish to consider timing your tenant’s rent to coincide with their Universal Credit payment date.

In some cases, it is possible for a tenant’s rent to be paid direct to the landlord. This is known as an Alternative Payment Arrangement, however these arrangements are certainly the exception, rather than the rule.

Eligibility for direct payment to landlords will be subject to both financial and vulnerability risk assessments. There will be a screening process and things may be put in to place that fall short of direct payments to the landlord (such as budget support).

As with the existing system, Universal Credit will permit deductions to be made from benefit entitlement including for rent arrears. This is intended to be as a last resort. Deductions are prioritised and rent arrears along with mortgage arrears are in the first priority category.

Where certain conditions are met (such as the UC having a housing cost element, the tenant being in debt for rent payments and the tenant still occupying the property) the DWP may decide to deduct a monthly amount from the Universal Credit. This can then be paid to the landlord.