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Universal Credit and How it Affects Landlords

Universal Credit

Do You Have to Tell Landlord About Universal Credit?

Private renters are in no way obligated to inform their landlord if they make a claim, or are currently receiving finical support through universal credit. With this being said a landlord will likely ask the tenant to complete a series of affordability checks during the referencing process, potentially bringing the renter’s income into question as employment, current income and credit histories are scrutinised during this process.  

Whilst some landlords may choose to reject an application from a renter that is being paid universal credit, it may be worth asking the tenant to provide additional references or even a request that they obtain a guarantor; with the scarcity of landlords that have been historically receptive to renting to DSS tenants this could secure a longer tenancy for owners that do proceed with the offer.  

Why Do Landlords Not Want Universal Credit?

Rental property owner’s reluctance to open their doors to those that claim housing benefits is nothing new, with advertainments claiming “No DSS” being widespread for a number of years. Although the subject may have been cast into the limelight once more thanks to landlord’s adopting a blanket stance against renters that are in receipt of financial support being seen as indirect discrimination.  

From 2016 to 2020 local housing allowance rates were frozen, seeing the financial support that tenants could expect to receive and in turn pay their landlords drastically distance itself from the true cost of renting. The housing charity Shelter noted that in the final year of the freeze on benefit payments the local housing allowance was not sufficient in 97% of cases when letting a two-bedroom home. Further to this a 2018 study carried out by the Residential Landlords Association revealed that almost three quarters, or 73% of landlords expressed their lack of confidence they held in being able to recover rent arrears from tenants receiving universal credit.  

Historically landlords have stated that they do not wish to rent to tenants that are claiming universal credit thanks to:  

  • Terms in their mortgage and insurance policies  
  • Inability to recover rent arrears  
  • Detachment from the true costs of renting  
  • Encourages non-payment of rent  

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Universal Credit Does Not Cover My Rent

Universal credit is paid to the claimant in monthly instalments, with the initial payment being made directly to their bank account 5 weeks after the claim is submitted. The exact amount that a tenant can expect to receive will largely be dictated by their individual circumstance, with factors such as housing costs and existing lines of credit being accounted for. Typically, private rental sector tenants can expect to either receive an amount in accordance with their local housing allowance rate, or their monthly rental cost, whichever is the smaller amount.  

To the dismay of claimants, universal credit is not intended to cover the tenant’s rental obligations in full, but rather support them towards financial stability. To this end even whilst receiving universal credit the claimant will be exclusively liable to cover the cost of their rent.  

However, if it is shown that the tenant is unable to budget their income and cover their expected living costs, any universal credit amounts dedicated to paying housing costs will be paid directly to the landlord.  

How Can I Find Out if My Tenant Is Claiming Housing Benefits?

The department of Work and pensions currently does not inform landlords within the Private Rental Sector that any of their tenants have made a claim for financial support through universal credit. With this being said, providing that the owner is considered a Social Sector Landlord then there are two ways  in which they will be brought to their attention.  

  • Social Rented Sector landlords will be notified through the online universal credit portal if any of their tenants makes a claim.  
  • The tenant’s universal credit case manager will email the landlord seeking confirmation of their housing expenses.  
How much Universal Credit will I get for housing? PropertyLoop

Will Universal Credit Contact My Landlord?

As mentioned, universal credit will not contact a landlord simply to inform them that one of their tenants has made a claim for financial support due to data protection regulations. With this being said, if it is shown that the tenant is unreliable in their rental payments and their housing segment of the universal credit must be paid to the landlord, the owner of the property will of course be contacted to confirm payment details.  

Why Does Universal Credit Ask For Landlord’s Details?

In the circumstance that payments need to be made directly to the landlord, universal credit will phone them to ensure they have the correct payment information and that the appropriate amounts will be paid.  

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Proof of Housing Costs Universal Credit

As can be expected, when making a claim for universal credit tenants will be expected to show evidence of the amount, they pay to their landlord in rent each month. For tenants that do not wish to have their landlord know they are in receipt of financial support there are a number of ways in which this can be accomplished without their involvement, however it is of course possible to show your rental obligation through correspondence signed by your landlord.  

Renters are able to prove their housing costs when claiming universal credit by:  

  • Showing their rent book 
  • Providing a copy of their tenancy agreement  
  • Providing a recent statement from their rent payment 
What is the maximum Universal Credit payment? PropertyLoop

Universal Credit Letter From Landlord Example

If the tenant is unable to provide evidence of their rental expenditure thorough producing a tenant agreement, they will need to show a letter from their landlord. This correspondence will need to comprise confirmation of the landlord’s identity, the start date of the tenancy, the amount of rent the tenant is expected to pay, alongside how often this payment is due.  Further to this if there are any bills included within this cost, a breakdown will need to be provided of these additional charges.  

Alternatively, owners are able to complete a “landlord declaration”, a form that will see them detail the composition of the rental property, alongside confirming how much rent is paid and how frequently by the tenant.  

Universal Credit Landlord Helpline

Before any information regarding the tenant’s universal credit claim can be shared with the landlord, the explicit permission of the renter must be provided. However, providing this consent is given the landlord is able to speak directly to the tenant’s case manager using the universal credit helpline (0800 328 5644).  

Universal Credit Rent Calculator

It is possible for tenants to use online “benefits calculators” to estimate how much universal credit they may receive towards their rent. In order for an accurate estimate to be given the applicant will need to show their current income, including their partners, their current expenditure including their mortgage, insurance and council tax, alongside any savings they may have. However, for any full-time students moving into private rentals, such tools will not provide an accurate estimation as to the amount of housing support you will receive.  

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