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Universal Credit in the PRS: new guidance released for landlords

Attitudes towards renting to tenants on benefits are changing in the private rented sector, and the government’s new guide brings added clarity.

Universal Credit is a single benefit payment to replace the previous system where payments were received as separate amounts, such as Jobseekers’ Allowance and Housing Benefit. While its introduction may not affect the majority of landlords, those who rent to tenants in receipt of benefits – or those who are considering doing so – should take note of the new guidance.

Universal Credit is paid directly into the recipient’s bank account, and it includes the portion allocated to go towards housing costs. It is then the individual’s responsibility to ensure they pay their housing costs if they are in private rented housing.

The document released by the government advises landlords to familiarise themselves with the new guidance, stating landlords should:

  • consider how Universal Credit may impact your business
  • consider how you might need to adapt any policies or processes
  • engage with your tenants early to identify any support needs making sure they understand their need to make rent payments

How attitudes have changed

“No DSS” used to be a common feature in many advertisements for private rented accommodation. The acronym is an old-fashioned one, referring to “no Department for Social Security”, but basically means the property owner will not accept applications from tenants on benefits.

However, after much campaigning from the likes of Shelter and the RLA, this type of discrimination is much rarer now, although the stigma attached to renting to tenants on benefits still exists. Banks and building societies have also been working towards reducing the prejudice, with many removing restrictions on buy-to-let mortgages for landlords renting to benefits claimants.

What to do if the tenant can’t pay

If tenants receiving Universal Credit are struggling to keep up with their monthly rental payments, the landlord (or tenant) can apply for an Alternative Payment Arrangement (APA) Managed Payment to Landlord (MPL). Applications can be made at any time and are assessed individually.

The effect of this, if approved, is that rather than the housing element of a tenant’s Universal Credit payment going to the tenant, it goes directly to the landlord. While rent arrears are the most common reason for such an application, other reasons include addiction problems, mental health issues, learning difficulties and previous homelessness.

To read more about how things have changed in the private rented sector, read this article.

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