Renting on Universal Credit — The Housing Cost Element Explained

Universal Credit and Private Renting

Millions of private renters in England receive Universal Credit (UC) as part of their income. UC includes a housing cost element specifically designed to help cover rent costs. Understanding how this element works — and why it often does not cover the full rent — is essential for anyone renting in the private sector on UC.

How the Housing Cost Element Works

Universal Credit replaces a range of legacy benefits including Housing Benefit. The housing cost element is calculated based on your circumstances and is subject to a cap set by the **Local Housing Allowance (LHA)** rate.

The LHA rate is set by the Valuation Office Agency for each **Broad Rental Market Area (BRMA)** — geographic areas designed to represent a local rental market. The rate is also set by bedroom size, based on your assessed household need:

The LHA rate is intended to cover around the 30th percentile of rents in the BRMA — meaning it should cover approximately 30% of properties available in the area. In practice, in many high-cost areas, the LHA rate falls significantly below actual market rents, creating a shortfall tenants must fund from other elements of their UC payment.

How Much Will You Receive?

Your housing cost element will be:

• Your actual rent (if it is less than the LHA rate), or
• The LHA rate (if your rent is higher than the LHA rate)

You can check current LHA rates at the VOA website: voa.gov.uk/reference/lha-direct

How UC Housing Cost Is Paid

By default, the housing cost element is included in your monthly UC payment, paid directly to you. You are responsible for paying your rent to your landlord from this payment.

This is different from Housing Benefit, which was often paid directly to landlords. Some landlords and agents prefer direct payment — this is available through an Alternative Payment Arrangement.

Alternative Payment Arrangements

You or your landlord can request an **Alternative Payment Arrangement (APA)** from the DWP through your UC work coach, in circumstances where direct payment to the tenant is causing problems (rent arrears building up, vulnerability, domestic abuse). Under an APA, the housing cost element is paid directly to the landlord.

If you think an APA would help you manage rent payments, speak to your UC work coach or Jobcentre Plus.

The Benefit Cap

If you are subject to the benefit cap — a limit on the total amount of UC and other benefits you can receive — your housing cost element may be reduced. The cap is currently higher in Greater London than elsewhere. If the cap is being applied to your award, check the DWP's online calculator to understand your entitlement.

Discretionary Housing Payments

If you are receiving the maximum LHA rate but still face a shortfall between your UC housing element and your rent, you can apply for a **Discretionary Housing Payment (DHP)** from your local council. DHPs are not a right — councils have limited budgets and award them at their discretion — but they are worth applying for if you are facing genuine hardship. Common reasons for DHP awards include:

• Rent shortfall while you look for cheaper accommodation
• Deposit or first month's rent costs
• A period of increased housing cost following a family breakdown

Getting Help with a Deposit

UC does not include a specific deposit payment, but you can request a **Budgeting Advance** or use the Flexible Support Fund to help with moving costs. Some councils also operate deposit guarantee schemes for people on UC.

Landlords Refusing UC Tenants

Blanket "no DSS" or "no benefits" policies have been successfully challenged in the courts as indirect discrimination under the Equality Act 2010. While not explicitly prohibited in all circumstances, landlords who refuse to consider any UC tenant at all are exposed to discrimination claims.

The Renters Rights Act includes measures to make explicit "no DSS" bans more clearly unlawful. If you believe you have been turned down for a property solely because you receive UC, seek advice from the Equality Advisory Support Service (EASS).

Practical Steps

• Check your LHA rate before renting to understand your likely shortfall
• Look for properties in your BRMA that are within or close to the LHA rate
• Ask your work coach about APA if direct payment would help
• Apply for DHP from your council if you have a shortfall
• Keep your rent payment records in Property Passport UK alongside your tenancy documents