How Housing Benefit is changing

Housing Benefit is one of the benefits being replaced by the new single Universal Credit payment. Before full roll-out of the new system, some tenants may start to receive their housing costs or rent paid to them as part of their Universal Credit. The tenant will then be responsible for paying rent. Here are the main points landlords need to know about these changes.

The housing element of Universal Credit

When people are moved onto Universal Credit, the single payment for their household will include a ‘housing element’. This will replace the help they currently get from Housing Benefit.

Universal Credit – including the housing element – is paid monthly in arrears.

Direct payment of rent - what is it and when is it coming in?

If you’re a registered social landlord and you receive your tenants’ rent directly from your local council, this will change under Universal Credit. Instead, tenants will receive their ’housing element’ direct and be responsible for paying it to you themselves.

Before the new system comes in, some tenants who are not yet claiming Universal Credit might be selected to start receiving their Housing Benefit payment direct.

The Department for Work and Pensions has committed to consult with social landlords before deciding whether to move their tenants onto direct payments. They will take into account any information you provide about your tenants’ ability to manage with direct payments.

If your tenant can’t manage their rent payments

A tenant can ask to have their housing payments switched to the landlord for a period of time while they get the support they need to get their money under control.

If a tenant has rent arrears, then, as their landlord, you can ask for the rent payments to be temporarily switched to you.

Other changes to Housing Benefit

The benefit cap

There is now a limit on the total amount of benefit that people aged 16 to 64 can claim.

If someone is getting more than the following amounts in benefit, their Housing Benefit is reduced to bring it within the limit.

  • £500 a week for couples (with or without children) or lone parents.
  • £350 a week for single people with no children

The under-occupancy penalty

Anyone renting from a local authority, housing association or registered social landlord, who is considered to have a spare bedroom – and is not covered by one of the exemptions – has their Housing Benefit reduced. This is sometimes referred to as the ‘Bedroom Tax’, the ‘under-occupation penalty’ or the ‘removal of the spare room subsidy’.

A tenant’s Housing Benefit is cut by the following percentage:

  • 14% for one extra bedroom
  • 25% for two or more extra bedrooms

Help for people at risk of rent arrears

Some tenants affected by the benefit cap or the under-occupancy penalty may struggle to make up the shortfall in their Housing Benefit and risk going into rent arrears.

The Money Advice Service is able to provide support to people in this situation, including help with budgeting and where to go to claim financial and welfare assistance.

Discretionary Housing Payments

If any of your tenants are facing hardship as a result of Housing Benefit changes, they may be able to apply for a Discretionary Housing Payment. These are payments from local authorities designed to help top-up Housing Benefit in the short-term.

Your tenant can either: