Renting to tenants who are receiving benefits can be a great way to fill your properties, but it’s important to understand the rental payment process when you’re working with these types of tenants. In this guide, we’ll explain how rent payments work for tenants on benefits, and what you can do as a landlord to ensure you receive the rent you’re owed.

How are Rent Payments Made for Tenants on Benefits?

When a tenant is receiving benefits, their rental payments can be made in several ways. The most common method is through the housing element of Universal Credit, which we’ll discuss in more detail later in this guide. Other benefits that can be used to pay rent include:

• Housing Benefit: This is a government-funded benefit that helps low-income individuals or families pay their rent. The amount of Housing Benefit a tenant can receive depends on their income, rent, and other circumstances.
• Universal Credit: This is a monthly payment that replaces six previous benefits, including Housing Benefit. Universal Credit is designed to support individuals who are on a low income or out of work.
• Discretionary Housing Payments (DHP): These are additional payments that can be made by the local council to help tenants who are struggling to pay their rent.

It’s important to note that the process for applying for these benefits varies depending on where your property is located. You can contact your local council or Citizens Advice Bureau for more information.

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How Does Universal Credit Affect Rent Payments?

Universal Credit is paid directly to tenants, and it’s up to them to use the money to pay their bills, including rent. However, landlords can request a Managed Payment to Landlord (MPTL), which means that rent payments are made directly to the landlord from the tenant’s Universal Credit account. To request an MPTL, landlords must fill out a UC47 form and provide evidence that the tenant is in arrears or is at risk of falling into arrears.

What Other Benefits Can Tenants Use to Pay Rent?

In addition to Universal Credit, tenants may be eligible for Housing Benefit or Local Housing Allowance. Housing Benefit is a means-tested benefit that is paid to tenants who are on a low income and who are renting from a private landlord. Local Housing Allowance is similar to Housing Benefit, but it’s paid based on the area in which the tenant lives.

How Can Landlords Ensure Rent is Paid in Full and on Time?

As a landlord, it’s important to ensure that you receive your rent in full and on time. Here are some steps you can take to help ensure this happens:

• Verify your tenant’s benefit payments before agreeing to rent to them.
• Request a Managed Payment to Landlord (MPTL) if your tenant is on Universal Credit.
• Consider using a rent guarantee scheme to protect yourself in case your tenant falls behind on rent payments.
• Communicate clearly with your tenant about rent payments and any expectations you have around payment dates and methods. Some tenants may even choose to pay rent in advance, using their benefits to cover the cost. This can provide reassurance to landlords that rent will be paid, but it’s important to remember that benefits may be subject to change.
• Make sure your rental agreement includes clear language around rent payments and consequences for late or missed payments.
• Be proactive in addressing any rent arrears with your tenant and work with them to come up with a plan to get caught up.

FAQs

How Does the Housing Element of Universal Credit Work?

The housing element of Universal Credit is designed to cover the cost of rent for tenants who are on a low income. The amount of housing element a tenant receives depends on a variety of factors, including the location and size of their property, their income, and their family situation.

What Happens if a Tenant Falls Behind on Rent Payments?

If a tenant falls behind on rent payments, it’s important to address the situation as soon as possible. Landlords can work with their tenant to come up with a plan to get caught up on rent payments, and can also consider using a rent guarantee scheme to protect themselves from financial loss.

How Do I Verify a Tenant’s Benefit Payments?

To verify a tenant’s benefit payments, you can ask to see their award letter or a bank statement that shows the payment. You can also contact the tenant’s local council or Citizens Advice Bureau for more information.

Can I Refuse to Rent to Tenants on Benefits?

No, you cannot refuse to rent to tenants who are receiving benefits. This would be considered discrimination and is illegal. However, you can verify a tenant’s ability to pay rent before agreeing to rent to them.

Conclusion

Renting to tenants on benefits can be a great way to fill your properties, but it’s important to understand the rental payment process and how to ensure you receive the rent you’re owed. By familiarising yourself with the various benefits that tenants can use to pay rent, requesting Managed Payments to Landlord, and being proactive in addressing any rent arrears, you can protect your rental income and maintain a positive relationship with your tenants.

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