The Department for Work and Pensions (DWP) is reviewing the controversial system that allows landlords to collect rent directly from tenants’ Universal Credit payments. The move follows concerns that the automatic deduction process may be contributing to tenant debt rather than preventing evictions.

Under the current system, landlords can request up to 20% of a tenant’s monthly Universal Credit to cover rent arrears and ongoing payments. These requests are processed automatically by computer software without direct consultation with either the tenant or the DWP.

Now, the department is reassessing this approach. The review follows a recent legal case that saw Nathan Roberts challenge the automatic deductions after his benefits were used to cover rent arrears, despite an unresolved dispute over property repairs.

Government reassessing policy after court ruling
Work and Pensions Secretary Liz Kendall has pledged to improve the welfare system, stating: “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.”

This announcement follows the DWP’s decision not to appeal a court ruling that found in favour of Roberts. The ruling determined that his landlord’s direct deduction of benefits was unfair, highlighting potential flaws in the current policy.

While tenant advocacy groups welcome the review, many landlords are alarmed by the prospect of losing a system designed to ensure rent payments are prioritised. Without direct deductions, there is growing concern that rental arrears could increase, putting further strain on an already pressured private rental market.

Landlords argue that the existing process provides vital security, especially in cases where tenants struggle with budgeting or fail to pass rent payments on. Without an alternative in place, rental income could become increasingly unpredictable, potentially leading to higher eviction rates.

Some property investors are now calling for a compromise that ensures landlords can still receive payments while offering tenants a fairer system. A spokesperson for the National Residential Landlords Association (NRLA) said: “While it’s important to protect tenants from excessive deductions, landlords also need guarantees that rent payments will be honoured. Scrapping the system without a viable alternative could lead to more instability in the rental sector.”