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Universal Credit (UC) housing costs element

Universal Credit (UC) housing costs element can help with rent and some service charges if you are a tenant. If you are a homeowner you can receive help with your mortgage interest payments in the form of a Support for Mortgage Interest Loan.

1. What is the Universal Credit (UC) housing costs element?

This money is to help you with your housing costs.

It can help with rent and some service charges if you are a tenant.

If you are a homeowner you can't get the housing costs element to help with mortgage payments, but you might be able to get it for ground rent and service charges. Homeowners might be able to get help with mortgage payments in the form of a Support for Mortgage Interest Loan.  Interest will be charged on the loans.  Loans will be repaid upon the sale of a claimant’s house; or on transfer of ownership of the property. Read our Support for Mortgage Interest Loan guide for more information.  

Applies to: England, Scotland, Wales, and Northern Ireland

 

Administered by: Department for Work and Pensions

 

Updated: April 2019

2. Can I get Universal Credit (UC) housing costs element?

Tenant

If you are a tenant you have to be the person who is responsible for paying the rent to get help with your housing costs.

You will not usually qualify for help with housing costs if you:

  • live in the home of a close relative
  • are a full-time student (unless you have a disability or have children)

Homeowner

If you are a homeowner you must not have any earned income. If you are making a claim as a couple, if either of you have any earned income, of any amount, you will not qualify for a housing costs element.  Owner-occupiers, who are leaseholders, can still receive help with some service charges through Universal Credit Housing Costs Help.  Owner-occupiers with a mortgage have the option of applying for a Support for Mortgage Interest Loan for help with the mortgage interest.

 

Updated December 2018

3. Universal Credit (UC): How much will I get? I'm a private tenant

Your housing costs will be calculated using the Local Housing Allowance (LHA) for your area.

There will be a LHA rate set based on rental prices in your area and the number of rooms you need based on the size of your benefit household (ie you, your partner if you have one and your children who live with you). 

For example, if you are single, don't have any dependent children and are aged under 35, in most cases your LHA will be based on one room in shared accommodation.

This could mean that your housing costs element will not cover all of your rent if your home is larger than you need or too expensive.

You can visit the LHA Direct website (link opens in new window) to find out what your Local Housing Allowance is.

 

Updated June 2017

4. Universal Credit (UC): How much will I get? I'm a social tenant

Your housing costs element will be based on your eligible rent. However, a size restriction is applied when calculating your award. This means that your eligible rent may not be taken into account in full if it's considered you have more bedrooms than your household actually needs.

You are allowed one bedroom for each category shown below:

  • each adult couple
  • each person over 16
  • two children of the same sex under 16
  • two children under 10, regardless of their sex
  • any other child
  • an overnight carer you need but who doesn't normally live with you.

If your home is considered to be too big for you, your eligible rent which is used for the calculation will be reduced by:

  • 14% if you have one spare bedroom
  • 25% if you have two or more spare bedrooms.

Households protected from this reduction:

  • Foster carers who have had a child placed with them, or have registered as a carer, in the last 12 months
  • Parents of armed forces personnel while their child is away on duty
  • Parents of a severely disabled child unable to share a room with a sibling

 

5. Universal Credit (UC): How much will I get? I'm a homeowner

Owner-occupiers, who are leaseholders, can get help with service charges paid as a housing element within Universal Credit. You normally have to serve a waiting period of approximately nine months from the date of your Universal Credit claim, before you can receive this help.

However, help with mortgage interest payments is now in the form of a loan on which you will be charged interest. Please read our Support for Mortgage Interest Loan guide for more detailed information about this loan. Here are a few details: 

Maximum loan amount

There is an upper limit on the total loan amount that can be included in your claim. The upper loan limit is £200,000. Your housing costs element will therefore be based on your total loan amount owed, or £200,000, whichever is lowest.

Standard Interest rate

The Support for Mortgage Interest Loan, which is help with interest payments on mortgage, home purchase loan, or qualifying home improvement loan, are calculated using a standard rate of interest, not your lender’s actual interest rate for your loan. This means that if your interest rate is higher, there may be a shortfall between the help provided and your contractual payment.

The current rate of interest used when calculating help with housing costs is 2.61%.

Calculation

Your housing costs element will be your loan amount owed (or £200,000) multiplied by the standard interest rate, divided by twelve in order to get the monthly amount.

There are restrictions on the help provided if your mortgage or loan was taken out or increased after you became entitled to Universal Credit, or if your housing costs are deemed excessive.

Waiting period

You will not receive a housing costs element for the first nine months after qualifying to have one included in your award. This is called a 'qualifying period'.

If you were receiving Jobseeker's Allowance or Employment and Support Allowance immediately prior to your Universal Credit claim, the time spent on that benefit can count towards your qualifying period.

Repaying the loan

Support for Mortgage Interest Loans together with the interest charged on the loan has to be repaid upon the sale or transfer of ownership of a claimant’s house.  Please read the repayment section of our Support for Mortgage Interest Loan guide for more information.

Service charges 

Universal Credit claimants will be able to get help with some eligible service charges  through the housing costs element of Universal Credit.  This is a part of your Universal Credit and is not a loan.

 

Updated May 2019
 

 

6. Universal Credit (UC): Housing costs contributions

A deduction will be made from your housing costs element for rent payments for each non-dependant in your household. This is called a housing costs contribution.

A housing cost contribution is a fixed amount of £73.89 per month for each non-dependant.

Certain claimants are exempt from this. No deduction will be made for housing costs contributions for a single person or couple with a non-dependant where one or both of the claimants are:

There will also be no deduction made for housing costs contributions if the non-dependant is:

  • under 21 years old
  • in receipt of state pension credit
  • in receipt of the care component of Disability Living Allowance at the middle or highest rate
  • in receipt of Attendance Allowance
  • in receipt of the daily living component of Personal Independence Payment
  • entitled to a payment of one of the disability benefits mentioned but not receiving it for one of the set allowed reasons
  • in receipt of carer’s allowance
  • a prisoner
  • responsible for a child under 5 years old

 

Updated: April 2019

7. How will I be paid the Universal Credit (UC) housing costs element?

For tenants the housing costs element will be paid as part of your Universal Credit payment and will go straight into the bank account or other account nominated by each household.

The Department for Work and Pensions will have the ability to pay your housing costs element straight to your landlord in certain circumstances.

For homeowners the Support for Mortgage Interest Loan will be paid straight to your lender.

Further help

If you need extra financial assistance to cover housing costs and you are a tenant you may be able to claim Discretionary Housing Payments from your local authority.

Homeowners needing extra financial assistance to cover housing costs should seek independent debt advice.

 

April 2018