Universal credit housing costs element payment condition
The universal credit housing costs element can be claimed for rent payments and some service charges.
Payments covered by the housing costs element
The housing costs element can be awarded if a claimant is liable to make payments for accommodation which they occupy as their home.[1]
The payments must be for either:[2]
rent payments
service charge payments
When calculating the housing costs element, the DWP works out the maximum amount of rent and service charges that can be covered. These are called 'relevant payments'.[3] The rules are different for:
private renters
social renters
owner occupiers
Owner occupiers
Since 6 April 2018, payments towards interest on mortgages are not paid as part of universal credit.
Universal credit claimants might qualify for a separate support for mortgage interest (SMI) loan. SMI is a loan from the government. Claimants should be referred for independent financial advice about whether it is suitable for them.
Owner-occupiers can still claim for certain service charges under universal credit.
Definition of rent payments
Rent payments are defined as:[4]
rent
payments for a licence or other permission to occupy accommodation
rent payments or mooring charges for a houseboat
rent payments or site charges for a caravan or mobile home
occupation payments by residents of some almshouses
Payments excluded from being rent payments
The housing costs element cannot be paid for:[5]
ground rent
fees for tents or tent sites
charges for accommodation provided to people granted bail or 'approved premises'
payments for care homes
mortgage payments
payments for specified accommodation
payments for temporary accommodation where the rent is paid to a social landlord
Mesne profits and use and occupation charges
Mesne profits are payments due to a landlord where a tenant remains in occupation after the tenancy has expired. For example, if tenant's notice to quit has expired but they remain in occupation, or an occupier with basic protection remains after a possession order.
Use and occupation charges can be made where a landlord allows someone other than a former tenant to remain in occupation on a temporary basis.
Read more about mesne profits and use and occupation charges.
Universal credit regulations are silent on whether mesne profits or use and occupation charges count as rent. This is different to the housing benefit regulations, which include mesne profits and use and occupation as eligible payments.[6]
Universal credit claimants who have been asked to pay mesne profits or use and occupation charges might be able to argue that a licence has been created. Licence payments come under the definition of a rent payment and qualify for the housing costs element.[7]
Rent reductions under an incentive scheme
Where the claimant's rent or eligible service charges have been reduced under an approved tenant incentive scheme, the housing costs element is based on the rent before the reduction has been applied.[8]
The incentive scheme must be both:
operated by a provider of social housing
approved by the Secretary of State
Specified and temporary accommodation
Specified accommodation and some types of temporary accommodation are excluded from being paid for by universal credit.[9] People staying in these types of accommodation must claim housing benefit instead.
People who claim housing benefit for specified or temporary accommodation and are not in receipt of any other benefits might be able to claim universal credit for their other living costs. Their universal credit entitlement will not include the housing costs element, unless they can claim for two homes.
Specified accommodation
Specified accommodation is defined as:[10]
‘exempt accommodation’ provided by a non-metropolitan county council in England, housing association, charity or voluntary organisation where that organisation or someone acting on their behalf provides the claimant with care, support or supervision[11]
supported accommodation provided by a non-metropolitan county council in England, housing association, charity or voluntary organisation that falls outside the definition of 'exempt accommodation' because the care, support or supervision is not provided by the landlord or on its behalf
a refuge provided by a local authority, non-metropolitan county council in England, housing association, charity or voluntary organisation for people who have left their home as a result of domestic violence[12]
a local authority hostel providing care, support and supervision[13]
The DWP's Housing Benefit guidance for supported housing claims explains how decision makers should determine whether accommodation is specified. It provides information about the types of landlords that are included in the definition of specified accommodation and the meaning of 'care, support and supervision'.[14]
The guidance explains that it is the responsibility of local authorities to determine whether accommodation meets the specified accommodation definition. It instructs local authorities to advise claimants to claim universal credit for their housing costs if their accommodation does not meet the specified accommodation definition.[15]
Temporary accommodation
Since 11 April 2018, temporary accommodation has been excluded from being paid by universal credit when the rent or a licence fee is payable to a local authority or a private registered provider of social housing.[16]
Temporary accommodation is defined as accommodation secured by a local authority in order to meet its duties under a homelessness application or under the various powers available to the local authority under the Housing Act 1996. For example, the power to make accommodation available to prevent or relieve homelessness. This can include interim accommodation, accommodation provided under the main housing duty or accommodation pending internal review.
Universal credit claimants who were already receiving the housing cost element for temporary accommodation on 11 April 2018 will continue to receive this until either:[17]
the rent or service charges change
they are no longer entitled to the housing cost element, for example because they move out of the accommodation
Claimants who are still living in temporary accommodation following one of these changes must claim housing benefit for help with the rent or service charges.
Eligible service charges
Service charges are payments for providing services or facilities that are used by or benefit people living in the accommodation.[18]
Whether service charges count as relevant payments for the housing costs element depends on the type of accommodation the claimant is living in.[19]
Service charges cannot be included in the housing costs element if the claimant lives in:[20]
a tent
approved premises
a care home
exempt accommodation
Private renters
All service charges can be included when working out relevant payments for private rented accommodation.[21]
Rents in the private sector are often made up of both rent and service charges which are not separately identifiable. The DWP's Universal Credit and rented housing: guide for landlords states that it does not need to collect separate information about service charges, because the DWP will pay the lesser of the total rent or the appropriate local housing allowance rate.[22]
Social renters and owner-occupiers
There are additional conditions for when service charges can be included as relevant payments when the claimant:[23]
rents from a social landlord
is an owner-occupier
Service charges must:
be payable as a condition of occupying the home
be of a reasonable amount and relate to services or facilities which are reasonable to provide
fall within a specified category
The specified categories are:[24]
external cleaning of windows on the upper floors in a multi-storey building
internal or external repair of shared ownership or owner-occupied property
payments for the general upkeep of communal areas, for example, cleaning and utilities payments
payments for basic communal services, for example refuse collection, lift maintenance and access to the building
payments for essential items provided with the accommodation, such as furniture or domestic appliances
The DWP's Universal Credit: service charges - guidance for social landlords lists eligible categories of service charges, as well as examples.[25]
Additional restrictions for owner-occupiers
An owner-occupier cannot be paid the housing costs element for eligible service charges for an assessment period:[26]
where the claimant or their partner has any earned income
which is part of a 'qualifying period'
A qualifying period is a period of nine consecutive assessment periods during which the claimant is all of the following:[27]
an owner-occupier
claiming universal credit
not in receipt of earned income
When any of these conditions do not apply, the qualifying period stops running and must start again before service charges can be included.[28]
Where a claimant was claiming jobseeker's allowance or employment and support allowance immediately before they claimed universal credit, time spent on these benefits counts towards the qualifying period.[29]
Shared ownership
Shared owners can claim the housing costs element of universal credit for help towards their rent and eligible service charges. They might also qualify for a separate support for mortgage interest (SMI) loan.
Where shared owners are liable to pay rent, any service charges are assessed according to the rules for social renters and not the rules for owner occupiers.[30] There is no qualifying period and entitlement does not stop if the claimant works.
Last updated: 7 March 2023