DWP Universal Credit payments could be due a shake-up after a landmark court ruling.
A controversial system that automatically approves landlord requests to deduct tenants’ benefits to pay rent arrears and ongoing rent payments is being re-examined, Work and Pensions Secretary Liz Kendall has announced.
It comes amid concerns that the system – aimed at helping people avoid issues with their landlords such as eviction - may actually be pushing the poorest into debt. Currently, a computer program automatically approves landlord requests to deduct up to a fifth of someone’s monthly Universal Credit payments for outstanding rent repayments without them being consulted by either their landlord or DWP.
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This decision comes in response to a high-profile legal challenge in January, which was won by Nathan Roberts whose benefits were deducted and automatically paid to his landlord to cover alleged rent arrears and ongoing rent payments - despite a dispute about repairs to the property.
The Work and Pensions Secretary has confirmed DWP will not appeal this decision.
It comes as part of wider efforts by the Work and Pensions Secretary to fix the broken welfare system to make it fairer and ensure it improves living standards which will unlock economic growth – a key commitment in the government’s Plan for Change.
Work and Pensions Secretary, Rt Hon Liz Kendall MP, says: "I am determined to right the wrongs that have persisted in the benefits system for too long. The automatic approval of landlords’ requests for tenants’ benefits to be deducted is one of these.
"As well as urgently reviewing this system, I am bringing forward major changes to the health and disability benefits system so that it works for everyone, underpinned by the biggest employment reforms in a generation.
"We will continue to listen to people’s concerns, and transform our benefits system to one of fairness, not punishment."
In April, the Universal Credit Fair Repayment Rate will also come into force, reducing the cap on how much can be deducted from someone’s benefits from 25% to 15%.
This means approximately 1.2 million households will keep more of their Universal Credit payment each month, with households expected to be better off by £420 a year on average.
While the moves will be welcomed by claimants, concerns have been raised by landlords about how rent arrears can be collected from Universal Credit claimants.
Jamie Elvin, Director at Strive Mortgages says: "The government’s review of automatic rent deductions is overdue, but balance is key. Tenants need protections, but landlords can’t be left footing the bill for unpaid rent. When landlords struggle, evictions rise and councils face more pressure.
"Many tenants prefer paying landlords directly, yet red tape and poor council-landlord relations make it harder. Reform must ensure fair rent collection while protecting the vulnerable—because when landlords lose, tenants do too."
Michelle Lawson, Director at Lawson Financial echoes this: "Some tenants don't want to be in control of such monies and want to pay the landlord directly. This used to be possible on request. This does need to remain available and, given the housing crisis and the poor relationship between landlords and councils due to their poor practices, they should be trying together with landlords to help some of the most vulnerable in society."
She adds: "Landlords are being attacked enough and quite simply, if the rent is not paid it pushes the landlord into financial difficulty resulting in eviction and clogging up the court system as they cannot pay the mortgage without the rent.
"The eviction then puts further pressure on the council to rehome the tenants. Landlords cannot continue to absorb the results of poor Government policy without listening to the people on the ground. They have been told and warned enough times now."
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