Understanding Universal Credit for Landlords

This section hones in on the aspects of Universal Credit most pertinent to landlords.

How Universal Credit Functions

Universal Credit caters to individuals with low income or those unemployed. Typically, it is disbursed as a consolidated monthly payment to an entire household, encompassing assistance for housing costs. Claimants usually receive the payment directly and are responsible for managing their rent payments.

The amount of Universal Credit a tenant receives is contingent on their individual circumstances, recalculated monthly.

Claimants may continue to receive Universal Credit while employed, with the payment adjusting automatically based on earnings. A rise in earnings can decrease the Universal Credit payment.

In Scotland, claimants can opt for direct payment of housing costs to their landlord. Additionally, they have the flexibility to receive Universal Credit payments twice a month if preferred.

Housing Support Calculation

Generally:

• Private sector tenants receive the lower of their actual housing costs and the applicable Local Housing Allowance rate.
• Social sector tenants receive actual housing costs, minus reductions for spare bedrooms (14% for one spare bedroom, 25% for 2 or more).

Certain circumstances may warrant an additional bedroom, such as a household member’s inability to share due to disabilities or the need for regular overnight care.

While Universal Credit may contribute to some service charges, evidence of these costs is necessary.

It’s crucial to note that the granted amount may not always cover the entire rent. For instance, if a private sector rent exceeds the relevant Local Housing Allowance rate, the tenant must cover the difference. Social sector tenants with spare bedrooms may also witness a reduction in the housing support, necessitating them to bridge the gap.

If a claimant is employed, their Universal Credit payment may decrease, affecting the amount allocated for housing. Unlike earnings, the housing support is not protected, requiring claimants to use some earnings to fill the gap.

Additional Housing Benefit Payment

If a claimant received Housing Benefit before applying for Universal Credit, the Housing Benefit persists for the initial two weeks of the new Universal Credit claim. This payment is automatic, and most claimants need not contact their local authority. However, those who have changed residences should inform the local authority handling their Housing Benefit.

Following this initial payment, Housing Benefit typically ceases upon Universal Credit claim approval. This transition occurs automatically, without the claimant needing to notify their local authority about the switch to Universal Credit.

Temporary, Supported, or Sheltered Housing

Claimants in:

• Temporary accommodation due to local authority placement following homelessness
• Supported housing
• Sheltered housing

do not receive housing cost assistance through Universal Credit. Instead, they must apply for Housing Benefit to cover housing costs.

However, a small number of people may already receive Universal Credit assistance for temporary accommodation housing costs. This continues until a rent change occurs, prompting the need to claim Housing Benefit alongside Universal Credit, with the housing component no longer included in the latter.

Assessment of Housing Costs

Universal Credit is typically disbursed as a single monthly payment, calculated monthly based on a claimant’s circumstances during the preceding assessment period.

The first assessment period begins on the claim date, lasting one calendar month, with the initial payment issued seven days after its conclusion. Subsequent assessment periods maintain the same start, end, and payment dates.

Housing support is calculated on the last day of the assessment period, reflecting the circumstances on that date for the entire period. If a claimant moves out during an assessment period and pays no rent at the end, they receive no housing cost assistance for that month.

It’s imperative to inform your tenant of this arrangement so they can manage any outstanding rent.

Assistance with Housing Costs

While Universal Credit is typically paid to claimants, in specific circumstances, housing costs can be directly paid to the landlord to aid in household cost management. In Scotland, claimants can exercise this option.

If a claimant’s Universal Credit payment doesn’t cover their housing costs entirely, they may qualify for extra assistance from the local authority through a discretionary housing payment.

Claimants of Universal Credit may also be eligible for a reduction in Local Council Tax. Initiating the Local Council Tax Reduction application on GOV.UK guides claimants to their local council’s website, outlining the necessary steps.

New Universal Credit claimants should apply for Local Council Tax Reduction promptly, as many councils do not backdate it. Application can commence even before Universal Credit approval or payment.