Hi Mike
My job involves supporting people who are looking for and moving into new homes.
How can I work out how much money Universal Credit will allow for rent?
Ingrid
Hola Ingrid,
The amount that Universal Credit allows for the rent is called the Housing Costs Element.
Working this out is a three stage process:
- Work out how many bedrooms Universal Credit thinks you need.
- Work out a maximum amount of rent that Universal Credit can deal with according to your bedroom entitlement – there are different systems for social renters and private renters.
- If there are other adults living in the household – known as non-dependants – they may be expected to pay some of the rent.
Step 1 – How Many Bedrooms?
If you are a single, childless, private-renter aged under 35, Universal Credit says that you only need a room in a shared property unless:
- You have spent periods amounting to three months living in hostels for homeless people where you got support to be rehabilitated or resettled. This includes refuges, and can include the coronavirus Everyone In scheme.
- You get DLA Care Component at the middle or high rates
- You get PIP Daily Living Component
- You are aged under 25, and were in care on your 16th birthday
- Since you turned 16, you have had domestic violence inflicted or threatened by a partner, former partner or relative
- You have been a victim of modern slavery
- You have non-dependants living with you.
- You are “the subject of active multiagency management… under the Criminal Justice Act 2003”. A broader exemption applies in Scotland.
Remember though, this room-in-shared rule only applies to private renters.
If you don’t come under the room-in-shared rule, Universal Credit says that you need a bedroom for each:
- Couple.
- Single person aged 16 or over.
- Two children of the same sex.
- Two children under 10.
- Child under 16.
- Adult child who usually lives with you as a non-dependant who is a member of the armed forces “deployed on operations”.
An extra bedroom is allowed if:
- You are a foster carer who has been approved or had a child placed with you during the last 12 months.
- Someone who would usually be expected to share a room has their own room, because their disability means that they cannot reasonably share.
- Someone who lives with you gets overnight care from someone(s) who does not normally live with you, who stays with you on a regular basis.
Step 2 – The Maximum Rent Figure for Social Renters
If you rent your home from a council, a charity or a housing association Universal Credit can cover the full rent, unless you have spare bedrooms:
- If you have one spare bedroom Universal Credit expects you to pay 14% of the rent – so they can only pay up to 86% [Rent x 0.86]
- If you have two or more spare bedrooms UC expects you to pay 25% of the rent – so they can only pay up to 75% [Rent x 0.75]
If no other adults live with you, your Universal Credit Housing Costs Element will be the amount that you have just worked out in step 1.
If other adults live with you, go onto step 3.
Step 2 – The Maximum Rent Figure for Private Renters
For each local area, Universal Credit has a ceiling on how much they can allow, according to the size of home from step 1.
These ceiling figures are called Local Housing Allowances – you can download a list here.
The Local Housing Allowances only go up to four bedrooms. If step 1 says that you need more than four bedrooms, use the four-bedroom LHA.
If your rent is lower than your Local Housing Allowance, Universal Credit can cover the full rent.
If your rent is more than your Local Housing Allowance, Universal Credit can only pay up to the LHA amount.
If no other adults live with you with you, your Universal Credit Housing Costs Element will be the amount that you have just worked out.
If other adults live with you, go onto step 3.
Step 3 – Non-Dependants
If other adults live with you, and your partner if you have one, they may be expected to pay towards your rent.
These other adults are called non-dependants.
Deduct £85.73 per month for each non-dependant, from the figure you worked out in step 2.
The amount that you are left with is the Universal Credit Housing Costs Element.
Your non-dependants do not have to contribute to your rent if you or your partner have a disability and get DLA Care Component, PIP Daily Living Component or Attendance Allowance
Your non dependants do not have to contribute to your rent if they:
- Are aged under 21.
- Get Pension Credit.
- Get DLA Care Component at the middle or high rates.
- Get Attendance Allowance.
- Get PIP Daily Living Component
- Get Carer’s Allowance.
- Are a prisoner.
- Are responsible for a child aged under 5.
- Are your adult child who usually lives with you as a non-dependant who is a member of the armed forces “deployed on operations”.
Boarders and Lodgers
People who live in your home who pay you rent on a commercial basis (not close family members) are completely ignored in working out your Housing Costs Element. You do not get bedrooms for them in step 1, they do not count as non-dependants in step 3.
If you get rent from a boarder or lodger under the rent-a-room scheme this has no effect on your Universal Credit.
You probably need to get permission from your landlord to rent out your spare room to a boarder or lodger.