1. What Universal Credit means for landlords
This section focuses on those aspects of Universal Credit that are most relevant to landlords. For more detail about specific elements, or to find out how Universal Credit works from a tenant’s perspective, see the New to Universal Credit section.
For an overview of the main things landlords need to know see Universal Credit: Top tips for landlords
How Universal Credit works
Universal Credit is for people who are on a low income or out of work. It is usually paid as a single monthly payment to a whole household, and can include help towards housing costs. It is normally paid direct to claimants, and it is their responsibility to pay their rent themselves.
The amount of Universal Credit your tenant receives depends on their individual circumstances. The exact amount is calculated every calendar month.
People may continue to receive Universal Credit even when they are in work, depending on their earnings. The amount of Universal Credit they get will respond automatically to changes in their earnings. If their earnings go up, this can reduce their Universal Credit payment.
In Scotland, claimants can choose to have their housing costs paid straight to their landlord. They can also choose to receive Universal Credit payments twice a month if they prefer.
How much tenants get towards their housing
See the Housing section for a full explanation of what support Universal Credit claimants will get towards their housing costs. In most cases:
Private sector tenants will receive whichever is lower out of their actual housing costs and the relevant Local Housing Allowance rate.
Social sector tenants will receive their actual housing costs, minus any reductions for spare bedrooms (14% reduction for one spare bedroom, 25% for 2 or more).
There are circumstances which allow for an additional bedroom, such as where a member of the household is unable to share due to disabilities or where someone requires and receives overnight care on a regular basis providing they meet the qualifying criteria. Please see the full criteria here under the heading ‘rented accommodation’.
Universal Credit can help towards some service charges but evidence will need to be provided of these costs.
It’s important to note that the amount a claimant gets will not always cover the whole of their rent.
For example, if their private sector rent is more than the relevant Local Housing Allowance rate, they will need to pay the difference themselves. And tenants in the social sector who have a spare bedroom may see a reduction in the amount they receive towards housing – again, it will be up to them to make up the difference.
If a claimant is in work, this can reduce their Universal Credit payment. The amount they receive towards housing is not protected, so if their Universal Credit payment is reduced, they will probably need to use some of their earnings to make up any difference.
Additional Housing Benefit payment
If a claimant received Housing Benefit up to the date they applied for Universal Credit, their Housing Benefit will continue for the first 2 weeks of their new Universal Credit claim. The payment will be made automatically – most claimants do not need to contact their local authority about this. However, if they have moved home, they should contact the local authority who paid their Housing Benefit to make sure they have the correct details to make the payment. If Housing Benefit was paid direct to a landlord and the claimant has not moved home this final payment will go to that landlord.
Following this final payment, Housing Benefit will usually stop when the Universal Credit claim is approved. This happens automatically – the claimant won’t need to tell their local authority that they’re moving to Universal Credit.
Temporary, supported or sheltered housing
If a claimant lives in:
- temporary accommodation because the local authority placed them there due to homelessness
- supported housing, or
- sheltered housing
they will not receive anything towards their housing costs through Universal Credit. Instead they will need to claim Housing Benefit
People in this situation can still receive Universal Credit to help with their other costs.
There are a small number of people who will already receive help with temporary accommodation housing costs through Universal Credit. If someone receives this it will continue until there is a change to the amount of rent they pay. When that happens they will need to claim Housing Benefit as well as Universal Credit, and their Universal Credit payment will no longer include an amount towards housing.
When housing costs are assessed
Universal Credit is usually paid as a single monthly payment. The amount someone gets is calculated each calendar month, and depends on their circumstances during their preceding assessment period
A claimant’s first assessment period begins on the date they make their claim. It runs for one calendar month, and the claimant will receive their first payment 7 days after it ends. All subsequent assessment periods begin on the same date of the month (eg the 13th), end on the same date of the month (eg the 12th), and all payments are made on the same date of the month (eg the 19th).
A claimant’s housing support is calculated on the last day of their assessment period. Whatever circumstances are in place on that date will be considered to have been the case for the whole assessment period.
So if a claimant moves out of your property during their assessment period, the amount they get in housing costs will reflect their situation at the end of that assessment period. This means that if they are not paying any rent at that point, they will receive no help towards housing costs for that month.
You should make sure your tenant is aware of this so they can make arrangements to pay any outstanding rent.
Help with paying housing costs
In most cases Universal Credit is paid to the claimant, and it’s up to them to pay their rent themselves. However, in some circumstances housing costs can be paid straight to the landlord, if this is needed to help a claimant manage their household costs. In Scotland, claimants can choose this option themselves. To find out more see What landlords need to do
If a claimant’s Universal Credit payment doesn’t cover all of their housing costs they may be able to get extra help from their local authority through a discretionary housing payment
Universal Credit claimants may also be eligible for a reduction in their Local Council Tax. They can start the process to apply for Local Council Tax Reduction on GOV.UK. It will take them to their local council’s website, which will tell them what they need to do.
New Universal Credit claimants should apply for Local Council Tax Reduction straight away, as many local councils will not backdate it. They do not need to wait until their claim for Universal Credit has been approved or paid.
The guide to renting and Universal Credit is for landlords and letting agents, and highlights the support that’s on offer to help claimants pay their rent on time and in full.
Watch this video for an overview of what landlords need to know about Universal Credit and what you can do to support and advise your tenants: