How benefit caps can affect landlords

What is the Benefit Cap?

The benefit cap limits the total amount of benefits that people of working-age can receive. It was introduced in April 2013 and continues to impact both tenants and landlords.

What is the benefit cap?

The benefit cap restricts the total benefits a person or household can claim. If their entitlement exceeds the cap:

• Universal Credit payments are reduced by the Department for Work and Pensions (DWP), or
• Housing Benefit is reduced by the local council

This reduction may make it harder for tenants to pay their rent.

Who does the benefit cap affect?

The cap generally applies to:

• Adults of working age (over 16) who do not yet claim state pension
• Tenants whose benefits are due to exceed the cap
• Tenants with children
• Tenants who live in an area with high private rents

Important: This does not include if you live in a homeless hostel, refuge and most types of supported or temporary housing.

How Much is the Benefit Cap?

The cap differs depending on location (inside or outside London) and has changed several times since its introduction.

• Check the latest benefit cap rates on the GOV.UK website.

How the benefit cap affects landlords

The cap does not directly target landlords, but it can create knock-on effects, including:

• Shortfalls in rent payments: Tenants may struggle to pay the difference between their capped benefits and actual rent.
• Increased arrears risk: Reduced income increases the likelihood of missed or late payments.
• Pressure on tenancy sustainability: Tenants may need to seek cheaper accommodation if they cannot meet rent obligations.

What landlords can do

If tenants are affected by the benefit cap, landlords may consider:

1. Negotiating rent: Discussing reduced rent to keep the tenancy sustainable.
2. Signposting support: Encouraging tenants to apply for Discretionary Housing Payments (DHPs) or seek help from money advice services.
3. Monitoring arrears: Keeping detailed records of rent payments and addressing arrears quickly.
4. Seeking legal advice: If arrears persist, landlords should seek legal advice and consider terminating the tenancy.