What you need to know if a tenant is claiming Universal Credit

Some tenants being moved onto Universal Credit will not be used to managing their own rent payments. And it might even be the first time they’ve used a bank account. Here is some information to help you when talking with these tenants.

Rent payments

Although most tenants renting from a private landlord are already responsible for paying their own rent, the majority of social housing tenants currently opt for rent to be paid direct to their landlord. (Source: National Housing Federation)

However, the housing costs element of Universal Credit (help with rent) goes direct to the claimant, who is then responsible for paying it to their landlord.

Why this matters

The housing costs element of Universal Credit (help with rent) goes direct to the tenant who has to arrange their own rent payments.

Some of your tenants may need help with managing their rent payments, dealing with the extra money coming into their account, and protecting the security of their home.

It’s a good idea to start engaging with your tenants early. You can assess their needs, help them to understand their responsibilities regarding their rent, and suggest they make use of the support available to them.

We have tools and videos that your tenants can use to help them manage their rent.

Landlords will be consulted before their tenants are moved onto direct payments. And under Universal Credit a tenant’s rent can sometimes be paid direct to the landlord – this is known as an Alternative Payment Arrangement.

Bank accounts

Around 15% of local authority tenants and 13% of housing association tenants don’t have a bank account. (Source: National Housing Federation)

Why this matters

People claiming Universal Credit need an account with a bank, building society or credit union to be able to receive their payments.

Some of your tenants may be unfamiliar with the basics of choosing, opening and managing an account. We’ve got videos and articles that they can use to help them choose the right account for them and avoid bank charges.

Direct Debits

Not all of your tenants will be using Direct Debits to pay bills at the moment.

Two of the common reasons people give for not using Direct Debits is because they feel they will lose control over their money, or because they have previously incurred bank charges due to refused payments. (Source: Chartered Institute of Housing)

Why this matters

People claiming Universal Credit are going to be encouraged to set up a Direct Debit or a standing order for their rent and other essential bills.

They may need support to manage the timing of the Direct Debits and avoid refused payments and bank charges.

We’ve developed some videos you can use with your tenants to help them manage their bank accounts and be more confident about using Direct Debits and standing orders.

Monthly payments

Many people who claim benefits and tax credits budget on a weekly or fortnightly basis.

It’s been estimated that 2.7m Universal Credit customers will struggle with their finances as a result of monthly payments.

Two-thirds of people claiming benefits and tax credits say they regularly run out of money before the end of the month.

(Source: The Payments Council and the Department for Work and Pensions)

Why this matters

Universal Credit is a single payment that is paid monthly in arrears, to match the way most salaries are paid.

If someone already runs out of money one or two days before weekly or fortnightly benefit payments, there’s a risk that with monthly payments they’ll be without money for a longer period of time.

For this reason, when people claim Universal Credit they will be offered personal budgeting support from the government. This could include advice on managing money or more frequent payments for those who can’t manage monthly payments.

If you think a tenant needs help with budgeting, you could suggest that they do one or more of the following

  • 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 budget support at their local Jobcentre Plus.