Deductions from universal credit for rent arrears

The Department of Work and Pensions (DWP) can approve deductions from a claimant’s universal credit standard allowance to make payments to their landlord to repay outstanding rent arrears on their current accommodation.

These deductions can only be made where the claimant:[1]

• has an award of UC which includes the housing costs element, or is occupying exempt accommodation for which housing benefit is being claimed alongside UC

• is in debt for rent or any eligible service charges paid alongside or as part of the rent

• is currently occupying the accommodation to which the debt relates

A deduction for fuel debt cannot begin or resume where the combined earned income of the claimant and any joint claimant exceeds any work allowance they are entitled to.[2]

The DWP does not need the claimant's consent to approve a deduction for rent arrears. The DWP must notify the claimant if it intends to make such a deduction and give them the opportunity to respond before payments begin.[3]

How a landlord requests deductions

Deductions are requested from the DWP by the landlord using the same forms for seeking an alternative payment arrangement for the housing costs element on the DWP website: Landlord request for a managed payment or rent arrears deduction

The Universal credit regulations do not state how much debt a claimant must be in before the DWP can approve a deduction, but the DWP's Alternative Payment Arrangement guidance available on Gov.uk states that the claimant's landlord can request a rent arrears deduction if they have accrued rent arrears to the value of two months’ rent or more.[4] The guidance does not state whether the same principle applies where there are no rent arrears, but there are arrears of service charges that would qualify to be included in a deduction.

Payments of ongoing rent

Deductions are paid towards outstanding arrears and housing costs debts, not the claimant's current rent. Where the landlord is seeking to have the housing costs element for the ongoing rent paid directly to them, they would need to seek an Alternative Payment Arrangement (APA) to have the claimant's housing element of Universal Credit paid to them as a managed payment.

Read more about APAs on How universal credit is paid on Shelter Legal.

The DWP can deduct between 10 and 20 percent of the standard allowance to cover rent arrears alone.

In practice the DWP generally limits the combined amount of all deductions for debts to a maximum of 15 percent on the standard allowance.[5] The law allows for an upper limit of 40 percent of the standard allowance to be deducted for all debts combined, including deductions for rent arrears.[6]

Deductions can exceed all of these limits as a 'last resort' where it is necessary to prevent eviction.[7]

The deducted amount is paid to the landlord every 28 days, with one 28 day period a year in which no payments are made.[8] This means that 12 payments are made per year, despite there being 13 four week cycles within the year.

Deductions from universal credit must stop if the claimant's earnings, or the combined earnings of joint claimants, meet or exceed their work allowance for three consecutive monthly assessment periods.

A claimant has a work allowance if they are responsible for children or they have limited capability for work.

Read more about How a work allowance is calculated on Shelter Legal.

A claimant can request a mandatory reconsideration of a decision to make a universal credit deduction. After the reconsideration, a claimant can appeal the decision to the First-tier tribunal.[9]

Read more about Challenging universal credit decisions on Shelter Legal.

A claimant can also request the deduction be altered because there has been a change of circumstances.

Read more about reporting a change of circumstances on Shelter Legal.

The DWP does not normally make deductions for more than three debts at the same time. Total deductions must not exceed 40 percent of the standard allowance. In practice the DWP typically limits deductions to 15 percent of the standard allowance.

Where the total deductions for debts would exceed the allowable amount, the DWP applies a priority order to determine which debts are deducted first.

Deductions for rent arears have different priority depending on the percentage of the standard allowance being deducted. Rent arears deductions of 10 percent (the lowest allowed) have high priority on the list. Deductions above 10 percent have a much lower priority.

Find out more about how different deductions from universal credit for debts are prioritised on Deductions from universal credit for debts on Shelter Legal.