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Understanding Housing Benefits

Understanding Housing Benefits

Thousands of families across the UK will be affected by changes to housing benefit due to come into force this week - part of the biggest shake-up of the welfare system for decades.

 

Ministers argue the new measures, amounting to £2.4bn in savings, are necessary, not only to tackle the rising cost of benefits and the budget deficit, but also to create a fairer system for taxpayers and to provide greater incentives for people to work.

 

They say expenditure on housing benefit in cash terms has increased significantly from £11.2bn in 1997/1998 to £20bn in 2009/10, and without reform they predict it will reach £24.7bn by 2014/15.

 

However, housing bodies and charities have warned that the changes will force thousands of poorer people out of expensive areas, such as central London, and increase homelessness.

 

So what are the changes to housing benefit, when will they be introduced and who will be affected?

 

What is housing benefit?

Housing benefit is a government payment made to those who cannot afford to pay their rent. Its current form was introduced in the early 1980s but it has been modified several times by subsequent governments.

 

Who gets housing benefit?

It is available, subject to a means test, to tenants of both private and social (public and not-for-profit) landlords.

Claimants include low-paid workers, unemployed job-seekers, low-income pensioners and economically inactive adults such as the long-term sick, the disabled and full-time unpaid carers.

As of November 2010, there were 4.8 million claimants of housing benefit, with 1.5 million of those renting in the private sector.

 

How much private rent can people claim?

In 2008, the previous Labour government changed the way housing benefit was calculated for private tenants, introducing a system called the local housing allowance (LHA), which is administered by local authorities.

LHA rates - the maximum amount of benefit that is paid in different local rental markets - are currently set at the median average (middle value) of a sample of rents in a local area. But this is set to change.

 

What changes are being made to housing benefit?

Ministers have announced a host of new rules determining how housing benefit is allocated, with some the most significant changes applying specifically to local housing allowance.

Some of the changes were announced in the emergency Budget last year and some in the autumn Spending Review.

Some of the measures will come into effect on 1 April 2011, others will not be introduced until later this year, 2012 or 2013.

However, ministers have dropped one planned measure - to penalise job seekers by cutting their housing benefit by 10% after 12 months.

 

 

A small percent of Martin & Co properties will accept Housing Benefits with a suitable guarantor and a month rent plus a cash deposit.