After the new coalition government announced sweeping changes in the way benefits are calculated and paid, Kirklees Council held a seminar on the topic for local Landlords on 17 February 2011 at the Deighton Centre, Huddersfield.
The turnout to the meeting was high with over 100 local landlords and letting agents in the room. Chairing the meeting was Steve Washington from Kirklees Council.
Alex and Will from the Martin & Co Huddersfield office attended the meeting and can report the following changes that will be introduced from 01 April 2011:
- Housing Benefits & Local Housing Allowance (LHA) are to be phased out completely by April 2017 in favour of the new "Universal Credit" scheme that is outlined in the Welfare Reform Bill 2011.
- Housing Allowances to be calculated at the 30th percentile (currently calculated at the 50th percentile) resulting in substantial reductions across all property sizes.
- Housing Benefit annual changes will be calculated using the Consumer Price Index (CPI) instead of the Retail Price Index (RPI), resulting in a 1.7p/£ loss to landlords - as of April 2013 the VOA will not control benefit levels, they will be based on the CPI.
- Removal of the 5 Bedroom+ allowance (capped at the 4 Bedroom Rate).
- Non-dependant contribution to increase to £60pw.
- LHA Top-Up will be removed from 01 April 2011.
NB: All changes will affect all existing and new LHA claims from 01 April 2011. Where the changes affect existing claims, there is a 9 month protection period in place to allow tenants to find alternative accommodation or negotiate a rent reduction with their letting agent.
The Government have issued provisional changes (correct as of January 2011) that are subject to change:
Bedrooms Current New Rate Reduction
Shared Accom £61 £57.50 £3.50
1 Bed £86.54 £75.00 £11.54
2 Bed £103.85 £92.31 £11.54
3 Bed £121.15 £114.23 £6.92
4 Bed £160.38 £138.46 £21.92
5 Bed £191.15 £138.46 £57.69
The Government have also announced plans for the age limit for single claimants to be raised from 25 to 35 as of April 2012; meaning that any single claimant under 35 will only be entitled to the Shared Accommodation rate. At the moment this is under review and has not been confirmed, however it is subject to secondary legislation and a new Act of Parliament is not required to implement this change.
In order to implement these changes, the Government has given local Councils the power to arrange payments direct to Landlord/Agent where the Landlord offers a concession that will secure a Tenancy where the Tenancy would not normally be granted (i.e. The Landlord offers a rent reduction, The Landlord does not request a security deposit from the Tenant, other concessions are acceptable upon approval by Kirklees Council Housing Benefit & Housing Options departments).
If you would like to discuss how the above changes will affect you and your tenancies please contact Martin & Co Huddersfield on 01484 453935.
A note of Caution - All changes are effective as of 01 April 2011 and any new "Claims" from this point are subject to the new rates. All landlords signing agreements with their Tenants on or before 31 March 2011 should ensure that their Tenants submit their Claims before the cut-off date.