Universal Credit/DSS, Should I Take Them As A Tenant?

There can be a lot of scare-mongering going around relating to Universal Credit tenants that rely on the Governmental Benefit System to sustain a normal lifestyle, however that only relates to a small minority of claimants.

So, I’ll run through the pros and the cons of things to be mindful of if you do have a Universal Credit claiming applicant!

The Potential Pros Of Universal Credit/DSS Applicants

  1. It’s cost-effective!
    Entirely down to supply and demand, there is an endless list of Universal Credit applicants looking for somewhere to live, but are struggling as most landlords will refuse them.

    So simply popping an advert on Facebook or Gumtree will easily see you tens – if not, hundreds – of enquiries, with eager applicants wanting to move in.

  2. The current demand outweighs the supply by far!
    Just as any other marketable product or service, a rental property is subject to supply and demand too.

    As most agents or landlords will refuse benefit-supported tenants, you could demand a premium on the rent as the demand is far greater than the supply.

  3. A fairly consistent source of income.
    Whether due to an economic crisis, or the effects due to a Pandemic, there are job cuts happening far too often.

    As a consequence, the likelihood of the ‘professional working tenants’ falling into arrears has risen over the last few years.

    The funds paid to a Universal Credit tenant are direct from the government, it could be seen as a more reliable source of income for some.

  4. You could be eligible for government-funded energy improvement schemes.
    Schemes such as ‘Warm Front’ are government-funded schemes that provide grants to improve the energy efficiency of the property, making them stay warmer for longer.

    The amount given as a grant varies depending on the circumstances, but the most you could be eligible for is £6000!

The Potential Cons Of Universal Credit/DSS Applicants

  1. There are certain Universal Credit tenants that need to make up for the shortfall of rent.
    Unless there are specific circumstances, most Universal Credit tenants will have to cover whatever the shortfall of rent is.

    Your rent may be £700pcm, however, the government has only agreed to provide £550 of that sum, and the remaining £150 per month would be expected to be covered by the tenant.

    For some tenants, living day to day can sometimes be a struggle to make the ends meet as it is, so having to cover some of the rent could pose a risk to the long-term effects of keeping them as a tenant.

  2. Rent Guarantee Insurance could be difficult to obtain
    There are certain criteria that are expected of tenants to be able to obtain rent guarantee cover, but it’ll vary between different insurers.

    Check out our ‘Everything You Need To Know About Taking Our Rental Guarantee Insurance Policy‘ page for a better insight into what landlords need to know about this policy.

    You may struggle to get the cover that suits you with these tenants, and if you do, you’ll pay a higher premium due to their circumstances.

  3. There can be fluctuations in claimant allowancesAt quite short notice you could find your tenant has had their allowance slashed with almost no warning.

    Leaving both you as a landlord, and the tenant feeling anxious about whether the correct payment will be made.

    This can be due to various factors, but the local government will assess all claimant’s situations and periodically make changes to their eligibility to how much they’re entitled.

  4. Benefit-based payments aren’t made as consistently as the rent due dates
    Payments to claimants are made every 4 weeks, as opposed to the rent that is typically due every calendar month.

    Receiving payments every 4 weeks will most likely be days or even weeks away from rent day, so if your tenant isn’t conscious of this it could cause problems if they’ve dipped into that fund and are short come the due day.

What Else?

As with most things in life, there are pros and cons. It’s all about the personal perspective and your circumstances. There are some Universal Credit tenants that work part-time, and that top-up in income alone makes them a lot more attractive to take on.

Some may claim these benefits due to health or disability problems, genuinely facing difficulties, and taking on these applicants would mean you’d be helping really deserving people.

In some cases, you may be able to speak directly with the local council and request that payments are sent directly to you (the landlord), rather than via the tenant. This’ll means an almost guaranteed portion of the rent will be in your accounts, and if there is any shortfall, you’d have to obtain it from the tenant.