Universal Credit housing costs: how it works for renters

If you rent your home and get Universal Credit (UC), part of your payment is meant to help with rent. Here is how that housing costs element works, how it is worked out, and what to do if it does not cover your full rent.

What is the housing costs element?

The housing costs element is the part of Universal Credit that covers rent. For most working-age people it has replaced Housing Benefit. Housing Benefit still runs for some groups, like pension-age claimants and some social housing tenants.

By default, the money is not sent to your landlord. It comes inside your monthly UC payment, and paying your landlord is up to you. You can ask for it to go straight to your landlord instead. That is called a managed payment.

How is the amount worked out?

It depends on three things.

Whether you rent privately or from a social landlord:

• Private tenants: the amount is capped at the Local Housing Allowance (LHA) rate for your area and household size. LHA is set from the cheaper end of local rents. If your real rent is higher than the LHA, you pay the gap yourself.

• Social tenants (council or housing association): the amount is based on your real rent, minus some deductions. The main one is the bedroom tax (the spare room subsidy). If your home has more bedrooms than the rules say you need, 14% is taken off for one spare bedroom, or 25% for two or more.

Your income: as you earn more, your UC payment shrinks, including the housing part.

Your household: for private tenants, the LHA rate depends on how many bedrooms your household needs.

What if it does not cover my rent?

This is common, especially where rents are high. Your options include:

• Applying to the council for a Discretionary Housing Payment (DHP) to help with the gap. This helps most if you have just moved, have a disability, or have other special circumstances.
• Asking the Valuation Office Agency (VOA) to review your LHA rate if you think it is wrong
• Looking for a cheaper home that the LHA covers better

When is the money paid straight to the landlord?

You can ask for a managed payment to your landlord if:

• You find it hard to manage money
• You are behind on rent
• There are welfare or vulnerability reasons why it would help you

Your landlord can also ask for one if you are 2 or more months behind on rent.

Does housing disrepair affect my UC housing costs?

Not directly. Disrepair does not cut your rent, and it does not cut your UC housing element. But two things are worth knowing:

• If you win a disrepair claim, the compensation may affect your means-tested benefits. It depends on how much you get and how it is paid. Get advice if this applies to you.
• Withholding rent because of disrepair (a rent strike) can affect your UC housing element and can lead to arrears proceedings. Think very carefully, and get advice, before going down that road.

When should I contact Support for Tenants?

If your home has disrepair your landlord will not fix, call us on 0800 030 4669, whether or not you get Universal Credit.

No upfront cost. You only pay if you win, and the fee comes out of the compensation, not your pocket. If you don't win, you pay nothing.

Sources

• Welfare Reform Act 2012 (legislation.gov.uk)
• Universal Credit (GOV.UK)