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Navigating Universal Credit as a Landlord

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Universal Credit for Landlords

Universal Credit (UC) is now available everywhere in Great Britain.

Whilst the rollout has not been without controversy, it doesn’t have to be a reason for landlords to worry. Just Landlords specialise in insurance for landlords, including rent guarantee to help protect your investment.

Andrew Truglia from Just Landlords has written this handy guide to assist you in navigating through the complex world of letting to tenants on Universal Credit.

What is Universal Credit?

UC is the replacement for a host of benefits that were previously paid separately, including, but not limited to, Housing Benefit, Jobseeker’s Allowance and some tax credits. Anybody aged between 18 and 60, in work, or out of work, can potentially claim it.

In the past, social landlords received their tenants’ rent directly from the local authority, but under the new UC system, most tenants will receive the housing portion of their benefits before paying their landlord themselves. The idea of UC is to give claimants greater control of their finances and encourage budgeting to bring the benefit system closer to the conditions faced by working people. 

Should I be Concerned About Receiving Rent Payments?

Whilst this new system may pay off in the long run, landlords that were guaranteed to receive their rent were rightly left with a few concerns. UC is not always guaranteed to cover the entirety of the rent costs, and the addition of an extra step before funds reach landlords may extend the time before landlords receive their payment. There is also the issue that more vulnerable tenants may not be well enough equipped to manage their own money. It isn’t all doom and gloom though, there are ways to simplify receiving rent payments. 

How Can I Make the Process Easier?

  1. Share information. Make sure that your tenant knows exactly how much their rent is per month and provide paperwork detailing this;
  2. Talk to your tenant about their financial situation. If you know the date that they receive their UC payment, you can arrange rent to be taken shortly after, rather than asking them the day before. Communication can solve many issues before they even arise;
  3. Make sure your tenant is aware of their options. Encourage them to set up a direct debit so they don’t have to remember to pay you manually. Also, make sure that they know that they can apply for an advance on their payment to pay bills before their UC claim officially begins;
  4. If all else fails, you can arrange to have rent paid to you directly. In Scotland, the tenant can choose this as an option from the start of the tenancy. Elsewhere, there must be evidence that the tenant is struggling to pay the rent, or that they have other circumstances that would make rent payments difficult in the future. These include severe debt problems, an addiction to drugs or alcohol or being a victim of domestic violence. For a full list, visit Shelter’s website.

The last option may seem like a quick fix, but it is worth remembering that building a good relationship with your tenant will go a long way towards catching issues before they become serious problems.

Even tenants that currently pay their own way may have a change of circumstances or fall into financial issues and have to go onto UC benefits.

If they feel that they can talk to you, then you’re far less likely to get any nasty surprises around the time when you’re due rent.

Good relationships equal happy tenants and landlords, and happy tenants and landlords mean long term tenancies that don’t involve costly eviction processes and void periods.

What Should I Do if I Need More Information?

The Government has published an overall guide to Universal Credit as a landlord as well as guides to alternative payment arrangements, social landlords and service charges

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