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Housing Benefit Changes April 2011 onwards

This document outlines significant changes to Housing Benefit (HB) starting April 2011, spurred by the rising costs of the welfare state. With HB expenses soaring from £10.5 billion in 2000 to £22 billion in 2011, reforms were necessary to improve work incentives for the 4.5 million recipients, primarily those of working age. Key changes include capping Local Housing Allowance (LHA) levels, increasing non-dependant deductions, and extending single-room rent restrictions. The document also highlights potential landlord and tenant responses to these reforms.

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Housing Benefit Changes April 2011 onwards

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  1. Housing Benefit ChangesApril 2011 onwards Mick Lear Benefit Service

  2. Why reform benefits? • Cost of welfare state projected at £164.7b, total amount of income tax collected £140.0b • Housing benefit increased dramatically, £10.5b in 2000, increasing to £22b in 2011 • 4.5 million people are receiving HB, of which 3 million are of working age, need to improve work incentives.

  3. Headline changes – For HB From April 2011 • LHA levels capped to the 4 bedroom rate • Caps for all other bedrooms by size (1, 2 and 3) • DHP fund increased nationally but allocation not known • Extra bedroom for a carer where claimant needs overnight care • Non-dependant deductions increased for 3 years From October 2011 • LHA levels set at 30th percentile (ie 30th cheapest rental value out of a hundred properties, rather than the 50th) From April 2013 • From 2013 LHA levels up-rated on the consumer price index (not RPI) • Extending “single room rent restrictions” to all single claimants under 35

  4. National Picture - Savings Estimated savings from HB changes in the UK DWP Memorandum for the Social Security Advisory Committee, July 2010

  5. National Picture - Impact Impact of setting LHA rates at the 30th percentile in 2010/ 2011 Source: DWP (July 2010)

  6. April CAPsImpact forSELHP? A new upper limit will be introduced for each for each property size 1 bed £250 2 bed £290 3 bed £340 4 bed £400

  7. 30th percentile, Impact for SELHP

  8. Impact in Lewisham - 30th percentile

  9. Impact for Lewisham

  10. What are we doing? • Speak to landlords and claimants • 1st December for those affected by April caps, forum in February, mail-outs to all in advance of changes • Review options for use of DHP funding • Publicise details of changes • Dedicated information and contact points • Reviewing options for direct payment • Targeting 150 empty homes in Lewisham • Joint approach across Lewisham Council to support affected tenants But, we need to understand more about how landlords and claimants will react to the changes …..

  11. What do we know? • Not a great deal locally! • London-wide survey, inconsistent but …. • 40% of landlords would agree to reducing the rental charged • For larger properties 10% of landlords would agree to reducing the rent if the reduction exceeded £50 • 90% would accept a reduction of up to £20 • 46% may reduce rent charged if paid directly So, potentially, on a caseload of 9,600, if 90% of landlords accepted a reduction of up to £20, if 40% of landlords reduced the charge to the new LHA rate and 46% of landlords reduced the rent charge as a result of our paying directly, there would only be about 10% of cases affected by the change …..

  12. What we need to understand? • Landlord behaviour • Tenant behaviour • Numbers affected • What we can do to secure tenancies

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