Changes may impact on anyone in the three main sections of the property market affected by Housing Benefit commencing from this April. Those on benefit due to unfortunate circumstances such as unemployment, those who live off the benefit system as well as private rented landlords could all be notably affected.
There are important changes to Local Housing Allowance from April 2011. These changes will affect people getting Housing Benefit who pay rent to a private landlord.
Who is affected?
If you are making a new claim for Housing Benefit, the changes will apply to you from 1 April 2011.
If you are already claiming Housing Benefit, the changes are likely to affect the amount of money you get towards your rent but you may have more time before these changes apply to you.
If your circumstances don’t change, you will continue to get the same rate of Local Housing Allowance as you get now. This will continue for nine months after your local authority next assess your Housing Benefit, after 1 April. The information here will help you work out how the changes will affect you, or you can contact your local authority.
From 1 April 2011 the rates for Local Housing Allowance will be reduced across the country:
The maximum £15 weekly excess that some claimants can get will be removed.
Limits on payments:
A limit will be introduced so that Local Housing Allowance does not exceed:
£250 a week for a one bedroom property (including shared accommodation)
£290 a week for a two bedroom property
£340 a week for a three bedroom property
£400 a week for a four bedroom property
The maximum rate of Housing Benefit will be limited to the rate for a four bedroom property.
Explaining the Changes
These changes will affect almost everyone who is claiming or receiving directly or indirectly Local Housing Allowance.
Local authorities will be writing to people getting Housing Benefit about the changes.
It is important that all tenants read the letter carefully and seek further advice as they will need to consider what to do when the changes come in.
Tenants should contact their local authority to find out how this is likely to affect them. They should also seek advice from their Housing Benefit office before they sign any new tenancy agreement.
Landlords with tenants in receipt of benefit may also be affected. An increase in bad debts may well result across the private rented sector investment market and this will cap very high state paid rents in certain parts of the country. Indeed, it may suppress rents where a notable proportion of the rental payments in an area are dependant on housing benefit and its variations.
There have been a number of well publicised tenants on long term receipt of state housing benefit which have been living in millionaire homes in London and elsewhere at taxpayer’s expense. These adjustments may well prevent this regular occurrence.
There is more detail about Housing Benefit and the Local Housing Allowance rules in the money, tax and benefits section of www.direct.gov.uk
Housing Benefit information
Local Housing Allowance information
1st April 2011