Issues with social security benefits

Renting to tenants on benefits can be straightforward. Payments can go directly to a landlord helping to reduce the risk of arrears.  

But you should be aware of some issues that can arise and how to handle them. 

Overpayment of benefits to landlords

An overpayment means you received a benefit payment when you weren’t supposed to.

This can happen if your tenant:

• gives incorrect information when they claim a benefit, or 
• their circumstances change but they don’t update their claim 

Benefits agencies will usually recover the overpayment from the person they paid. This could be your tenant, your agent or you as the landlord. 

There are different rules for overpayments of Housing Benefit and Universal Credit.  

Housing Benefit overpayments   

The Housing Executive deals with Housing Benefit overpayments.

They can ask you to pay back money if it was paid to you and the tenant was not entitled to it and:

• the overpayment was your fault, or 
• the overpayment was a mistake by NIHE but you should have realised you were overpaid 

Not all Housing Benefit overpayments can be recovered. You may be able to argue that:  

• you do not have to pay the money back  
• the tenant should pay back the money instead 

Universal Credit housing costs overpayments 

The Department for Communities handles Universal Credit overpayments. They will recover all overpayments, even if their mistake caused the overpayment.  

They should recover money from your tenant if the money was paid to you, but the overpayment happened because the tenant:

• did not tell Universal Credit about something affecting their claim, or 
• gave incorrect information when claiming 

Dealing with overpayments 

If a benefits agency asks you or your agent to return an overpayment, ask them to give you: 

• a written statement outlining how and why the overpayment happened 
• an explanation of why you (rather than the tenant) must pay back the money 
• details of laws or policies they are relying on in making their decision 
• information on how to challenge the decision 

If you plan to challenge the overpayment, make sure you inform the agency in writing. This will stop them from taking legal action against you while they make a final decision.  

Talk to Landlord Advice if you have questions about benefit overpayments.

Benefit application turned down

To get help with housing costs, tenants must show that they have: 

• a low income, and 
• a right to live in the UK, and 
• a legal responsibility to pay rent 

Universal Credit or Housing Benefit can turn down an application if they suspect that the tenancy is not a genuine commercial agreement. This is known as a ‘contrived’ tenancy.  

A tenancy is contrived if the main reason for setting up the tenancy is to take advantage of the benefits system.  

If this happens to your tenant, they should get advice quickly. They might be able to challenge the decision but they will need specialist help. 

'Contrived' tenancies

Benefits agencies can suspect that a tenancy is 'contrived' when a landlord rents a property to a family member.  

If you’re renting to a relative, it’s more likely that they will get benefits if: 

• you've rented property to other tenants in the past 
• your tenant paid you rent before applying for benefits 
• you've given your tenant the correct tenancy paperwork 
• you can show that you’ll have to evict your tenant if they don’t pay rent 

The law says that a person cannot get benefits to help with rent if they: 

• are responsible for their landlord’s child 
• are renting a property from a former partner 
• live with their landlord who is a close relative or a partner of a close relative