DWP Universal Credit update as claimants may be missing out 3 options | Personal Finance | Finance

People receiving Universal Credit have been provided with DWP guidance outlining options available to those experiencing financial hardship. According to the National Housing Federation (NHF), Universal Credit recipients typically face higher levels of rent arrears than those paying through alternative methods.

The Department for Work and Pensions has faced widespread criticism over how the transition to Universal Credit has affected rent arrears. As of September last year, 45 per cent of tenants paying rent via Universal Credit were behind on payments.

The House of Commons Committee of Public Accounts has stated “Universal Credit causes financial hardship for claimants including increased debt and rent arrears, and forces people to use foodbanks.”

Critics have particularly targeted the initial five-week waiting period before payments begin – which can trigger a domino effect leading to rent arrears, reports the Mirror.

Citizens Advice highlighted in a 2024 report: “The 5 week wait is a significant source of hardship. It means new Universal Credit claimants must experience a period without (sufficient) income – or take out a loan that leads to deductions from their regular Universal Credit payments.”

The monthly payment structure of Universal Credit has been flagged as a contributing factor to rent arrears problems by critics including the Work and Pensions Select Committee and prominent Labour MP and welfare specialist Frank Field. However, the DWP emphasises that support mechanisms exist for those affected by this issue.

A recent Parliamentary briefing highlighted one potential avenue for claimants to explore. The issue emerged following an enquiry from Tom Hayes, Labour MP for Bournemouth East. He questioned the Department for Work and Pensions (DWP) about its targets for addressing housing arrears amongst Universal Credit recipients, and the methods used to track such cases.

Stephen Timms, Minister of State for the DWP, provided a response that shed light on available options.

DWP statement on rent arrears

In his written response dated January 12, he initially addressed the monitoring question before outlining the support available. “Rent is a contractual arrangement between tenant and landlord,” he stated.

“DWP is not party to this arrangement and does not monitor whether the contractual liability is being honoured.”

He proceeded to provide additional details that may prove beneficial for certain claimants.

“If a customer is vulnerable or in arrears we can, if it is deemed to be in their interest, arrange for payment to be made direct to the landlord and for an amount to be sent towards arrears,” he explained, before noting: “There are no Departmental targets with respect to the amount of arrears outstanding.”

One option available to claimants is worth exploring. These are referred to as Alternative Payment Arrangements (APAs).

According to official guidance, these arrangements cater specifically for individuals unable to cope with the standard single monthly Universal Credit payment and where financial harm threatens the claimant or their household.

APA options for Universal Credit claimants

Three APA pathways exist to assist those requiring extra support:

• split payment of an award between partners in a couple
• paying rent directly to their landlord, known as a ‘managed payment’
• more frequent payments: twice a month – or in exceptional circumstances 4 times a month – instead of once a month

An increasing number of claimants are now utilising this mechanism. The NHF reported a recent rise in claimants with an APA, climbing from 29 per cent in June 2025 to 42 per cent in September.

However, the system faces obstacles. In its assessment covering the period through to September 2025, the National Housing Federation noted: “Setting up Alternative Payment Arrangements (APAs) continued to be challenging for residents and members. In their feedback, housing association staff shared experiences of supporting their residents transitioning to Universal Credit and some issues they encountered, as well as challenges administering payments and responding to queries day-to-day.”

In a government update from December 2025, it was stated: “We expect most Universal Credit claimants will receive the single monthly payment and take responsibility for paying their own household bills on time, including their rent. But we recognise that some claimants will need extra support in managing this payment. Therefore, in some cases a managed payment might be appropriate.”

The government has provided examples of situations where APAs could be considered:

• the gov.uk website said: “is the claimant managing to pay their bills on time, particularly their rent, and have they fallen into arrears in the past, or are they currently in arrears?”
• the website asked: “do they think they will be able to manage a monthly budget, taking account of their income and outgoings over a calendar month?”
• “if the claimant is part of a couple, are they used to managing their money together and do they think they will be able to manage the single Universal Credit payment to the household?” the website asked.
• finally, the website listed: “is the claimant vulnerable (maybe they have addiction problems or have been homeless before)?”