A Guide for Landlords: Universal Credit

Universal Credit is a monthly payment that is given to someone to assist with their living costs.

There are several reasons why people may be on Universal Credit – it can be due to illness, preventing the individual to work or even child tax credit. As these funds can be used as housing benefit, it is vital that landlords understand what this means for them and how to best support their tenants that are receiving Universal Credit.

How does Universal Credit affect rent payments?

In many cases, a tenant will pay their rent to their landlord via direct debit through their bank account, taking full responsibility for their rent payments. For social housing tenants, they often opt for rent to be paid directly to their landlord. With the introduction of Universal Credit, any help with rent will go directly to the tenant, which leaves them responsible for paying their rent.

As a landlord, it is highly recommended that you reach out to your tenants about their situation. Each circumstance is unique, and they may require some advice on their responsibilities around rent. You may signpost them to support and guidance, most of which can be found online – Read more here.

What is an alternative payment arrangement?

Under the new terms and conditions of Universal Credit, it is possible that there may be an option for the tenant to opt out of rent going directly to their landlord. Widely know as the Alternative Payment Agreement, this option must be applied for. Landlords will be informed of this decision, should a tenant decide to make this arrangement with their rental payments.

Tenants without bank accounts

Interesting figures from the National Housing Federation identified that around 15% of local authority tenants and 13% of housing association tenants do not have a bank account. The issues that can arise from this is that a tenant requires a bank account to receive their Universal Credit payments. If you have a tenant that is unsure of how to open or manage a bank account, you can assist with this or recommend them to a local bank who can provide professional advice.

How might direct debits be affected?

Some tenants may not decide to use direct debits at first, especially if they are trying to figure out the logistics of receiving Universal Credit or are unfamiliar with using a bank account. They may have had direct debits in the past refused or received charges for late payments, which can obviously be very stressful or distressing for an individual.

Landlords should discuss this with their tenants to make sure they are comfortable with an agreed method of payment. You can go over setting dates for rent to be sent to you, as well as keeping lines of communication open with them to ensure that rent is paid on time. The Government typically provide advice on budgeting however, if you feel that this may be difficult for your tenant, you may want to point them in the direction of Citizens Advice for further support.

Further advice and support for landlords

For more advice regarding Universal Credit, visit the Government’s guide to Universal Credit and rented housing or go to the National Residential Landlords Association (NRLA) for advice.

At Boxall Brown & Jones, we are dedicated to taking the stress out of properties. We want to help let your property; you can find out more about our full property management services here. We are on a mission to help landlords, why not check out our other landlord guides or give our friendly lettings team a call on 01332 384438.

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