Housing Benefit changes / Welfare Reform | Berneslai Homes

Article: Housing Benefit changes / Welfare Reform

What do Government changes mean to you? 

The Government are reforming the Welfare Benefit system and Social Housing. 

Have you thought about what this will mean for you?

Welfare Reform

What are the key changes in Welfare Reform?

Welfare Reform introduces Universal Credit, an Overall Benefit Cap and an Under Occupation Penalty as well as stopping Direct Payments to Landlords in most cases.

Universal Credit aims to simplify the benefits system by bringing together a range of working age benefits into a single streamlined payment. It aims to:-

• Simplify the system making it easier for people to understand
• Improve work incentives
• Smooth the transitions into and out of work
• Reduce in work poverty
• Cut back on fraud and error

The benefits being replaced by Universal Credit are Income Support, Income Based Job Seekers Allowance, Income Related Employment and Support Allowance, Housing Benefit, Council Tax Benefit, Child Tax Credit and Working Tax Credit, Crisis Loans and Community Care Grants.

People claiming these benefits will be automatically moved on to Universal Credit on a phased basis from 2013.

Overall Benefit Cap plans to cap the total benefits a person or couple is entitled to. The cap will be set at the average net earnings for a working household. Current projections of the cap are £500 per week for couples and lone parents and £350 per week for single people without children- this includes housing costs.

Under Occupation Penalty introduces new size criteria for housing benefit claims in social housing and cuts the amount of benefit that people can get if they are deemed to have a spare bedroom in their council or housing association home.

The size criteria in the social rented sector would restrict housing benefit to allow for one bedroom for each person or couple living as part of the household with the following exceptions:-

• Children under 16 of same gender expected to share
• Children under 10 expected to share regardless of gender
• Disabled tenant or partner who needs non resident overnight carer will be allowed an extra bedroom

This would apply from April 2013 to tenants of working age but in the House of Lords peers voted by 258 to 190 to limit the penalties to only those households with two or more spare bedrooms and those with one extra room that have been offered suitable alternative accommodation. 

If you are of working age, receiving Housing Benefit and under-occupying you home you have some decisions to make because your benefits will be reduced to reflect the fact you have one or more spare bedrooms. You can make up the shortfall out of your remaining income, you could take in a lodger (but be aware of non-dependant deductions) or you can apply to transfer to a smaller property.

Direct Payments. From October 2013 working age tenants will personally receive the housing element of the new Universal Credit. Pensioners and vulnerable tenants will continue to see their housing costs paid straight to their landlord.

Direct payments help reduce personal debt and the risk of people losing their homes. Some tenants do not have a bank account and so would be unable to pay their rent by direct debit if direct payment to landlords were brought to an end. For Social Landlord the financial security that comes from direct payments is critical and keeps payment costs low.

Demonstration projects will run in six local authority areas from June 2012 to June 2013.

Social Housing Reform

What are the key changes in Social Housing Reform?

The scope of social reform includes Tenure, Allocations, Homelessness, Council Housing Finance, National Home Swap and Social Housing Regulation.

Tenure. Decisions on tenancy arrangements will be made locally. Currently social landlords can only offer lifetime tenancies. Whilst the security and rights of existing social housing tenants including when they move to another social rent home will be protected Councils and housing associations will now have the flexibility to offer new social housing tenants fixed tenancies. The minimum length of tenancy will be five years (two in exceptional circumstances) and there is no upper limit on the length of tenancy.

Succession. There will be an automatic legal right of one succession to a spouse or partner. However landlords will be able to give additional succession rights in the tenancy agreement if they choose. The changes to succession will not affect existing tenants or the right of a joint tenant to take over the tenancy when the other joint tenant dies.

Allocations. Councils will now be able to set their own rules about who qualifies to go on the housing waiting list. At the moment almost anyone can apply to live in social housing whether they need it or not. The Act gives local authorities greater freedom to set their own policies about who should qualify to go on the waiting list for social housing in their area and will be able if they wish to prevent people who have no need of social housing from joining the waiting list. Authorities will continue to be obliged to ensure that social homes go to the most vulnerable in society and those who need it most.

Homelessness. Councils have a duty to house people who are eligible in priority need and unintentionally homeless and this duty will remain in place. However under the current rules people who become homeless are able to refuse offers of accommodation in the private rented sector and insist that they should be housed in expensive temporary accommodation until a long term social home becomes available. The Localism Act allows local authorities to meet their homelessness duty by providing good quality private rented homes.

Council Housing Finance. Currently local authorities collect rent from their social tenants and then send the money to central government. Central government collects all the money raised this way into a single pot. Local authorities are then paid a sum out of the pot each year for the upkeep renovation and repair of social homes. In future instead of having to send the money raised by rent to central government and wait to see each year what share they get allocated back the council will buy its way out of this system in return for keeping the rent and using it locally to maintain their social homes.

National Home Swap. There are lots of reasons why people move house although evidence suggests that it is less straightforward for people who live in social housing to move than for other people. The Localism Act paves the way for a national home swap scheme enabling people who would like to swap their social home to access details of all other tenants who may be a suitable match.

Social Housing Regulation. The Act abolishes the Tenants Services Authority and transfers its remaining functions to the Homes and Communities Agency. Landlords will be expected to support tenant panels or equivalent bodies in order to give tenants the opportunity to carefully examine the services being offered. Currently there are two separate ombudsmen handling social tenants complaints about their landlord. In the future a single watchdog specialising in complaints about social housing will ensure consistency across the sector.