HOUSING BENEFIT CHANGES FROM APRIL 2011
From April 2011 there are significant changes to Local Housing Allowance (LHA) and increases to the rates of non-dependant deductions. LHA changes only affect tenants renting from private landlords. Increases to non-dependant deductions affect all benefit customers who have a non-dependant adult living with them.
1. Local Housing Allowance Caps
From 1st April 2011 the maximum rent used to decide housing benefit for claims decided under the LHA rules are capped as follows:
· £250 for a one bedroom property
· £290 for a two bedroom property
· £340 for a three bedroom property
· £400 for a four bedroom or more property.
Under LHA the rate used is decided by the number of bedrooms a tenant requires rather than the size of the property they rent. The appropriate LHA rate for the area where the tenant lives is compared to the appropriate cap and the maximum rent for housing benefit is the lowest amount.
The highest possible rent will be capped at £400 and the LHA rate for 5 bedroom properties has been abolished.
The majority of private rented sector tenants receive housing benefit under the LHA rules. There are exceptions, however. LHA rules do not apply to tenants with registered rents, cases where meals are included in the rent and tenants who have received benefit continuously for the same address since before 1 April 2008.
The changes to LHA from 1 April 2011 do not affect everyone at the same time.
For new claims
These changes affect all new claims, including changes of address within Westminster made on or after 1st April 2011.
For existing customers
Existing benefit recipients will receive transitional protection. Firstly there is no change to housing benefit until the anniversary of the LHA claim, when entitlement is reviewed. Secondly transitional protection applies for 9 months after the anniversary date. For example, if the claim was made on 12th April 2010, the anniversary will be 12th April 2011. The reduction in LHA resulting from the new rules will apply on 16th January 2012 (that is, the start of the week that falls 9 months after the anniversary of the LHA).
However, new rules may affect existing claimants sooner if they lose transitional protection. Transitional protection no longer applies if a household change means the tenant needs fewer bedrooms (e.g. because a family member moves out); or there is a change of address; or there is a break in claim. Established rules offering protection for people who need fewer bedrooms following bereavement continue to apply.
2. LHA rates will be set at 30 percentile
From April 2011 LHA will be set at 30 per cent of local market rents rather than at the median. This means that unless the rent is already one of the lowest 30% in the claimant’s area, the maximum LHA the claimant can be paid will be less than the rent If the claimant wants to avoid rent arrears they will have to make up the difference.
A central government agency, the Valuation Office Agency (VOA) is responsible for setting LHA rates. VOA has divided the country into a number of Broad Rental Market Areas (BRMA) and LHA rates are set for each size of property in each area based on market evidence. LHA rates are updated monthly and are publicly available via the government’s Directgov website.
Parts of Westminster fall within two different BRMAs: Central London and Inner North London. Only the LHA rate for a one-bedroom flat in the Inner North London BRMA is expected to be lower than the cap (in April 2011 the LHA based on 30th percentile was £245 and the cap is £250).
3. End to £15 excess payment
Under previous LHA rules, tenants who rented properties at lower than the appropriate LHA rate could receive benefit that was up to £15 more than the actual rent. This was intended to act as an incentive for tenants to “shop around” to find affordable accommodation. From 1 April 2011 the £15 excess is abolished. New claims and changes of address made on or after 1 April 2011 are affected immediately. Any £15 excess for an existing claim will end on the anniversary date.
4. Restriction for single tenants aged under 35
No cap applies to the LHA rate for shared accommodation which will be set based on 30th percentile from 1 April 2011 onwards. The LHA rate for shared accommodation is based on market evidence of the cost or a single room with access to a shared kitchen and bathroom. Currently, as well as applying to single people and couples with no children who choose to live in a single room, the shared accommodation rate applies to single tenants aged under 25. This means, for example, that a single person aged 23 who opts to rent a self-contained one-bedroom flat will receive housing benefit based on the LHA rate for shared accommodation.
From 1 January 2012 this will be extended to single people under 35. Government has opted to introduce this change from 1 January 2012 to ensure that when transitional protection ends for existing benefit recipients aged between 25 and 34, they will switch to benefit based on the shared accommodation LHA instead of LHA for a one-bedroom flat.
5. Extra bedroom criteria for disabled claimants
Before 1 April 2011 there was no provision under LHA rules for an additional room for an overnight carer who does not permanently reside with the benefit claimant.
From April 2011 if either the claimant or their partner are disabled and they need someone to stay overnight to provide care, they may qualify for housing benefit based on an LHA rate that reflects the extra bedroom. The claimant will need to show that:
· they have the extra bedroom in their home available for the carer to use
· care is required
· care is provided
This change will apply to all private tenants, including those who are exempt from the LHA rules and still receive benefit based on a rent officer decision specific to their home. However, the change is not expected to benefit Westminster residents because the capped LHA rates are significantly lower than market rents.
6. Non-dependants deductions
A non-dependant is anyone aged 18 or over who lives with a person claiming benefit on a non-commercial basis. Non-dependants are normally adult sons, or daughters, parents, relatives or friends. When there is a non-dependant living in the household housing benefit and council tax benefit are potentially reduced by a deduction that reflects an assumed financial contribution from the non-dependant. The deductions for non-dependants increased from 4th April 2011. For example, the minimum deduction for non-dependants who are not working or have an income of less than £122.00 gross a week increases from £7.40 to £9.40 for housing benefit and from £2.30 to £2.85 for council tax benefit. The amount of deduction for working non-dependants is tapered depending on income. The highest rate of deduction applies when gross weekly income is more than £387.00 gross per week and increases from £47.75 to £60.60 and from £6.95 to £8.60 for council tax benefit. Any shortfall between benefit and the full rent and Council Tax will have to be met by the tenant who will need to get the non-dependant to make a financial contribution.
7. Discretionary housing payment
From April 2011 the government will increase its contribution to local authorities’ Discretionary Housing Payments (DHP) budgets by:
· £10m in the financial year 2011/12
· £40m in 2012/13
Extra funding for DHP has been agreed to enable local authorities to provide extra help with rent costs to tenants affected by the caps who are vulnerable. For example a DHP could be awarded for a limited period to give a vulnerable tenant longer than the transitional protection period to look for alternative accommodation elsewhere that is suitable. A DHP can defer the impact of the caps but a vulnerable tenant will only be able to avoid moving home in the longer term if either the landlord agrees to accept an affordable rent or they are able to meet the shortfall from their own resources. There is also unlikely to be enough DHP available to help every tenant we class as vulnerable and it is inevitable that many tenants will have to move home or become homeless via eviction. Note: DHP is cash limited and is administered outside of the Housing Benefit scheme; it is paid at the discretion of the local authority.
8. Claimants should get advice, negotiate the rent with their landlord, find out if they can get discretionary housing payment or move to a cheaper area.
Claimants concerned about eviction should contact the Housing Options Service on 020 7641 1000.
Claimants who want to establish when their anniversary date falls and when their transitional protection is due to end should contact the Benefits Service on 0800 072 0042.
9. For further information and advice;
If you would like an officer from the Council to visit your school to describe the changes then please contact
Andrew Carter Service Manager, Homelessness and Partnerships Team
T:020 7641 1000
F: 020 7598 1720
Email:
Housing Options Service, 101 Orchardson Street, London, NW8 8EA
Or
Christine Wharton Housing Customer Services Manager
T: 020 7641 8203
Email :