Man at desk holding credit report

In Credit for Universal Credit

More and more landlords are asking tenants to overpay their rent if they are at risk of moving onto Universal Credit, research by Quids in! has found.

Housing associations and councils are advising householders to get their rent accounts in credit ahead of moving onto UC, which requires claimants to wait 6-12 weeks for their first payment.

Under UC, Housing Benefit is no longer paid direct to landlords but to the tenant. It is also paid monthly in arrears at the same time as other benefits being claimed. Often, if the tenant has not been in contact with the landlord about moving to UC, the first the tenant knows of their arrears is when they receive a letter mentioning eviction is a possible result of non-payment of rent.

Quids in! has learnt that many landlords now encourage tenants to overpay in the run up to going onto UC. This reduces the stress of falling behind with rent but can require serious budgeting skills to find the extra.

Over a year, ten pounds per week would create a £520 nest egg to fall back on while waiting for the first UC payment. However, many householders will want to set aside funds for other expenses apart from rent that cannot be covered without benefit payments coming in, like food and bills.

Quids in! is also advising claimants on any of the six benefits that will be replaced by UC in the next five years to explore options to open credit union accounts. Credit Unions are community-owned not-for-profit schemes usually offering competitive loans to regular borrowers.

For people moving onto UC, this means they can build a warchest to raid when benefit payments stop temporarily while also providing the option to take out a small loan to bridge the gap. (More on Credit Unions here.)

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