How landlords can protect themselves when a tenant is in receipt of universal credit

Universal Credit has now been rolled out nationwide. It combines some of the existing benefits to result in one monthly benefit payment including the housing element of which should help tenants with rent and service charges. This will, in most cases result in one payment made directly to the tenant. This change in payment can make it harder for tenants who are used to fortnightly individual payments to budget appropriately. Social housing landlords which have previously had payments paid directly to them may no longer have this option.

All social sector landlords should be advised by the DWP that their tenant is in receipt of Universal Credit however private landlords will not be. This means that private landlords will need to be extra careful in the checks that they undertake.

Whilst it has always been important for landlords to undertake stringent checks before taking on new tenants, this is now vital. 

Landlords should always

  1. Conduct thorough checks on the tenant’s employment status, identity, previous address, as well asking relevant questions such as reasons for leaving last address, length of time at current employment and previous employment.
  2. Obtain references from the tenant’s previous landlord.
  3. Get a credit check.
  4. If the tenant is in receipt of Universal Credit, ask the tenant to sign a letter of authority for the DWP to provide you with information in respect of their benefits.

Should any of these flag up potential problems, landlords should consider doing the following

  1. Insisting on a guarantor by way of a guarantor’s agreement. This guarantor should be in employment.
  2. Take a larger deposit and protect it in accordance with deposit protection rules.
  3. Set a shorter fixed term for the tenancy agreement if possible.

All landlords, especially social sector landlords, may need to think about helping their tenants to make the transition to the one monthly payment. Landlords should consider familiarising themselves with Universal Credit and consider updating their polices and processes in view of the same. They should also open communication with tenants to ensure that they are aware of their responsibilities and provide them with guidance on budgeting. The DWP provides guidance on managing benefits which landlords could signpost tenants to.

If the tenant can not get by with the single payment then they may be able to set up alternative payment arrangements. Should the tenant get in to arrears, there are several triggers that landlords can utilise. For one month’s rent arrears the landlord can get in touch with the DWP who will review the situation and can offer the tenant budgeting support and can make the decision to pay the rent directly to the landlord.

When arrears reach an equivalent of two month’s rent, the landlord can ask DWP to consider if an alternative payment arrangement would be an appropriate course of action.

In certain cases, the change to Universal Credit could leave tenants without money for a short period. If rent needs to be paid in this time, tenants can apply for Universal credit in advance but they must meet the threshold for being in need of this.

Should anybody require further advice in respect of these or other landlord and tenancy issues, we would invite them to contact us to see if our expert team might be able to help.