Welfare Reform

Important changes are taking place next year which will affect the amount of Housing Benefit some people can claim.

Under-Occupation

From April 2013, the government will restrict the amount of Housing Benefit payable to working age tenants if their property is larger than they require.
The Department for Work and Pensions estimates that this proposal will affect 670,000 Housing Benefits claimants nationally – this is approximately 32% of working age Housing Benefit claimants living in the social sector. At the moment, we understand working age to be people who are not yet entitled to claim Pension Credit – it is a changing date depending on when you become of pensionable age. The government intends to use the same size criteria to determine under-occupation that is used for Housing Benefit claimants who rent from private landlords. In April 2013 the Pension Credit age will be 61 years and 6 months.
What is a 'Spare' Bedroom?
Under the new rules if you have more bedrooms than the Government says you need, you will lose part of your housing benefit. The new rules mean you will be allocated one bedroom for:e

• each adult couple
• any other person aged 16 or over
• two children of the same sex under the age of 16
• two children under the age of 10 regardless of their sex
• any other child
• a carer (who does not normally live with you) if you or your partner need overnight care.

It does not matter how the ‘spare’ bedroom is used, the new rules will apply even if:

• you and your partner need to sleep apart because of a medical condition
• the main residence of your children is another address, but you have a spare room for when they stay with you.

What does this mean to you?
The government has set the reductions at 14% in Housing Benefit for one ‘spare’ bedroom and 25% for two ‘spare’ bedrooms. To find out if you will be affected by the bedroom tax, use the bedroom tax calculator.

Could this be you?
Mr and Mrs Smith live in a two-bedroom flat costing £70 per week in rent. At the moment housing benefit covers the full cost of their rent. Under the new rules they will have one spare bedroom. Their housing benefit will be reduced by 14% of their rent (14% of £70 = £9.80) Their housing benefit will be reduced by £9.80 to £60.20 per week. They will have to pay £9.80 per week towards their rent.

For more information on under occupancy, watch this information video.
 

Benefit Cap

From April 2013, the benefits cap would reduce the total amount of welfare benefits a household can receive.
The amount of benefit will be restricted to the level of the average earned income after tax for working households – estimated to be £26,000 per year. The government has said that the total amount of benefit will be restricted to £500 per week (£2,166 per month) for couples and lone parent households, and £350 per week (£1,516 per month) for single adults. Capping will not apply to households that include someone who is receiving Disability Living Allowance or Working Tax Credit, or to people getting War Widows’ Pensions. This change will also not affect people who have reached pension credit age. The benefits cap will work by reducing Housing Benefit for those households whose benefit income is more than the cap.

Who will it affect?
The cap is most likely to affect households living in expensive areas and larger households, in particular those with four or more children. It could mean a reduction in Housing Benefit of between £12 and £70 per week, although some households could face bigger reductions. This means that households affected by the cap will need to decide how they are going to make up the shortfall. If they are unable to, it could result in them having to move to alternative accommodation which may not be available.

For more information on the benefit cap, please watch this information video.

How we can help you
If you think any of the government’s proposed changes are going to affect you, please contact us and ask to speak to the  Income Management Team who will be able to talk you through the changes and offer you practical advice and support on how to manage your income and what steps you can take. We will also regularly update this information with the latest information on welfare reform.

For more information, please click here.