Record numbers of people in the UK are claiming Universal Credit with many needing cash to cover rent or mortgage payments with the coronavirus pandemic hitting household incomes.
Universal Credit includes an element to cover accommodation costs, incorporating what was previously paid separately as Housing Benefit.
Various polls have suggested many people are terrified of losing the roof over their heads because of changes brought about by the pandemic, reports BirminghamLive.
Housing charity Shelter has published research that found nearly one in five renters were scared of losing their job due to coronavirus. The poll of 498 renters by YouGov also suggested that one in four (24 per cent) has already suffered a pay cut or job loss due to the pandemic.
A further 23 per cent said losing their job would make them immediately unable to cover rent.
Many are asking if Universal Credit covers housing costs and how that works.
Does Universal Credit cover housing costs?
Universal Credit is intended to replace six other benefits. These include Housing Benefit, which will eventually be phased out.
The Government says that Universal Credit includes a component to cover housing costs, including service charges.
But whereas Housing Benefit is usually sent directly to landlords as a separate payment from other benefits, an amount to cover rent is included within a claimant’s Universal Credit payment. This means UC recipients must take responsibility for paying for accommodation costs themselves.
The Government said: “If you and/or your partner are responsible for paying rent for the home you live in, or if you have a mortgage, Universal Credit may provide help towards the cost. This is called Universal Credit housing costs.”
There is five-week wait for a first payment. It is advisable to tell a landlord that you are claiming Universal Credit and that a claim for housing costs has been included.
What happens if you are already on Housing Benefit?
If you are already receiving Housing Benefit, the Department for Work and Pensions will contact your local authority to stop it.
But to prevent issues with rent payments between Housing Benefit stopping and Universal Credit arriving, you will receive an additional two weeks’ worth of Housing Benefit to bridge the gap.
Can you ask for rent to be paid directly to a landlord?
It is the responsibility of the tenant to make sure rent and other housing costs are paid to a landlord in full.
But some vulnerable claimants have been unaware that UC includes money to cover rent and have fallen into financial difficulties.
If you find you are having trouble managing your money, you can ask to have your housing costs paid straight to your landlord instead.
How to get housing costs included in Universal Credit
If you are applying for housing costs for rented property as part of a Universal Credit claim, evidence of of rental payment levels are needed.
This could be a current tenancy agreement, rent statement, rent book, or a signed letter from your landlord.
If you live in social rented property, you enter details of your housing costs online, and the Department for Work and Pensions will contact your landlord to confirm that these are correct.
Rules about shared ownership schemes
A shared ownership scheme can be provided by housing associations where a tenant pays rent and but also pays a percentage to buy the home.
Usually, this will involve a mortgage amount and a rental sum. Universal Credit housing costs will include help towards rent with any help towards mortgage interest usually being paid direct to the lender.
This is how much a tenant can claim
If you pay rent to a local authority, council or housing association you will get your full rent as part of your Universal Credit payment.
But under the so-called Bedroom Tax, this will be reduced by 14 per cent if you have one spare bedroom, or 25 per cent if you have two or more spare bedrooms. This is known as Removal of the Spare Room Subsidy.
If you pay rent to a private landlord the amount of Universal Credit housing costs will be worked out by looking at the number of people who reside in the property.
The size of a home doesn’t matter – the amount received will be calculated by how many people live there.
The amount is set by the Local Housing Allowance rate in an area, based on average rental costs for that location.
What is the Local Housing Allowance?
Local Housing Allowance rates are calculated from the average rents in any given area and are used to determine the level of Housing Benefit awarded to those renting from private landlords.
There are around 1.4 million people in the private rental sector receiving Local Housing Allowance.
The allowance went up by 1.7 per cent in April in line with inflation and was also given a coronavirus boost to cover 30 per cent of market rents, which is giving £10 extra a month to affected households in the private rented sector.
You don’t have to suffer in silence if you’re struggling with your mental health. Here are some groups you can contact when you need help:
Samaritans: Phone 116 123, 24 hours a day, or email email@example.com, in confidence
Childline: Phone 0800 1111. Calls are free and won’t show up on your bill
PAPYRUS: A voluntary organisation supporting suicidal teens and young adults. Phone 0800 068 4141
Depression Alliance: A charity for people with depression. No helpline but offers useful resources and links to other information on its website
Students Against Depression: A website for students who are depressed, have low mood, or are suicidal. Click here to visit
Bullying UK: A website for both children and adults affected by bullying. Click here
Campaign Against Living Miserably (CALM): For young men who are feeling unhappy. Has a website here and a helpline: 0800 58 58 58
These are the average allowances from April 2020, with weekly and monthly equivalents:
A dwelling where the tenant has exclusive use of only one bedroom with shared use of other facilities.
April 2020 rate = £67 a week; calendar monthly equivalent £291.13
A dwelling where the tenant has exclusive use of only one bedroom with exclusive use of other facilities.
April 2020 rate = £120.82 a week; calendar monthly equivalent £524.99
A dwelling where the tenant has the use of two bedrooms.
April 2020 rate = £143.84 a week; calendar monthly equivalent £625.02
A dwelling where the tenant has the use of three bedrooms.
April 2020 rate = £155.34 a week; calendar monthly equivalent £674.99
A dwelling where the tenant has the use of four bedrooms.
April 2020 rate = £195.62 a week; calendar monthly equivalent £850.02
How to cope with rent arrears
A landlord can apply to have the housing costs element of Universal Credit paid directly to them if a tenant is more than two months in arrears.
Is council tax the same?
Universal Credit claimants may be able to get a reduction in council tax.
Anyone claiming Universal Credit for the first time should apply for Local Council Tax Reduction straight away, as many local councils will not backdate it.
Is the housing costs element enough?
There are discrepancies or shortfalls leaving tenants struggling.
In Lambeth, south London, renters are paying on average £2,200 each month, according to the Office for National Statistics (ONS), but the benefit only covers £1,675.
In Cambridge, £950 has to cover roughly £1,350 rent.
A Government spokesman said: “The Government has put in place unprecedented measures to support tenants from getting into financial hardship or rent arrears, including protecting millions of jobs up and down the country and increasing Universal Credit and housing allowances.
“Emergency legislation is now in place so no social or private renter can be forced out of their home – with landlords unable to start proceedings to evict tenants. We have the power to extend this if necessary.”