First tenant: Is Universal Credit going to work?

Kad_Williams

I'm a new landlord currently advertising my flat and getting - thankfully - a lot of interest from potential tenants. In amongst the various enquiries are messages from people asking whether I will accept tenants on Universal credit. I have and I am still trying to do my research on how UC works but I'm struggling to see whether it would be a good fit. My primary concern is whether Universal credit would cover the rent on this flat, which is £1200.00, for a single person, whom most of the relevant enquirers are. I think knowing whether this would be a stretch will help me judge the credibility of the candidates better, whom could well think my flat is reasonably priced (it's better-priced than most equivalent lettings in the area) and therefore provides a great opportunity, but maybe not be able to pay the ambitious price in the end. It's hard to tell at the moment whether these are realistic propositions or pipe-dreams...

Any thoughts?

foxy-stoat

I would just stick to professional folk - people with good references and in full time permanent employment.  

Smodlet

I'd check the terms of your LL insurance, and your (of course) Buy-to-Let mortgage, assuming you have such as benefits can invalidate their terms. 

[Deleted User]

Kad_Williams said:

I'm a new landlord currently advertising my flat and getting - thankfully - a lot of interest from potential tenants. In amongst the various enquiries are messages from people asking whether I will accept tenants on Universal credit. I have and I am still trying to do my research on how UC works but I'm struggling to see whether it would be a good fit. My primary concern is whether Universal credit would cover the rent on this flat, which is £1200.00, for a single person, whom most of the relevant enquirers are. I think knowing whether this would be a stretch will help me judge the credibility of the candidates better, whom could well think my flat is reasonably priced (it's better-priced than most equivalent lettings in the area) and therefore provides a great opportunity, but maybe not be able to pay the ambitious price in the end. It's hard to tell at the moment whether these are realistic propositions or pipe-dreams...

Any thoughts?

There are a number of elements to Universal Credit:

• Child Tax Credit
• Housing Benefit
• Income Support
• Income-based Jobseeker’s Allowance (JSA)
• Income-related Employment and Support Allowance (ESA)
• Working Tax Credit

Your mortgage lender (if you have one) and insurer may preclude you from letting to people claiming certain elements of UC.  It is possible for working people to be in receipt of UC so it's not a one size fits all benefit.  Rightly or wrongly, a tenant relying solely on UC is more risky in my opinion.  Not necessarily because of the tenant but because of how quickly the tap to UC can be switched off and how slow it can be to get it turned back on.  If 100% of someone's income came from UC then both them and you would be subject to the whims of the government and its welfare policy.  That said, as it is so difficult for people in receipt of benefits to find private landlords willing to take them on you could find yourself with some model tenants who want to stay long term.

yksi

For a single person you can actually look up the maximum UC housing element online for your area. But to be candid, I would never accept UC-only tenants if it were my property. UC claimants are at the mercy of an idiotic system which has, and still can, cut benefits without warning and for spurious reasons, leaving someone penniless. Not to mention they are over-represented in tenancy problems.

In case it isn't apparent already, there's a heirarchy of the types of tenants most people want, in order:
1. working couple
2. working single
3. working family with teenagers
4. working family with kids/children
5. anyone not working or has pets or gets benefits or has a CCJ or is foreign

Discrimination? Oh yes. But legal, and probably smart, when it comes to protecting an expensive asset.

Mrsn

I would imagine that the rent you are proposing to charge in any event wouldn’t cover the amount that a person might be eligible for towards the LHA rates for your area so they would have to cover the shortfall by themselves via other monies.

Because UC can vary wildly each month due to changes in the claimants assessment periods the benefit due can drop dramatically with very little notice.

As other posters have pointed out you would need to check the terms of your mortgage to see if they are allowed.