What to do if your tenant is in arrears
When tenants on Housing Benefit move onto managing their rent themselves, you may have concerns about non-payment. Here’s what you can do if your tenant is struggling to pay their rent including when you can ask for their payments to be switched to you.
Non-payment because your tenant’s Housing Benefit has been reduced
Some tenants may have their Housing Benefit reduced – for example because of the benefit cap or under-occupancy penalty – and need to make up the shortfall.
You could suggest that they apply to the council for a Discretionary Housing Payment, which are designed to help top up Housing Benefit in the short-term.
The Money Advice Service provides support to people in this situation, such as help with budgeting and where to go to claim financial and welfare assistance.
Non-payment because your tenant’s Housing Benefit is late
If your tenant can’t pay their rent because their benefit payment is delayed, they can ask at the Jobcentre Plus for a short-term benefit advance. They would normally need to pay this back out of future payments.
Non-payment because your tenant needs help with budgeting
If a tenant tells you they’ll be paying their rent late because they’re struggling financially, you could also suggest that they discuss the matter with their Work Coach at the Jobcentre Plus office.
The Work Coach can refer them for Personal Budgeting Support or can recommend an ‘Alternative Payment Arrangement’.
This means the Department for Work and Pensions can decide to pay a person’s rent direct to their landlord for a while, until they get the support they need to get their money under control.
If you think someone needs help with budgeting, you can suggest these options to them:
- Use the Money Advice Service Budget planner to work out their monthly income and outgoings.
- Call the Money Advice Service Helpline on 0800 138 7777 and one of our advisers will be able to go through the budget planner with them and give them other money advice.
- Ask for budgeting support at their local Jobcentre Plus.
If your tenant owes you rent
If a tenant has rent arrears equivalent to one month’s rent, then you can ask for the decision to make direct payments to be reviewed.
If a tenant’s owes two months’ rent, their rent payments will automatically be switched to you.
If the Department for Work and Pensions agree to switch payments to you, the payment will be made into your bank account each calendar month in arrears.
The government is proposing that once the tenant has received budgeting support, they will return to direct payments within six months of the arrears being cleared.
Recovering unpaid rent
Jobcentre Plus can also make deductions from someone’s benefit payments to cover outstanding rent arrears. These are known as ‘third party deductions’ and they are paid direct to the landlord.
More in 'Resources for Professionals - Welfare Reform: Information for Landlords'