Housing Benefit
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Housing Benefit is a means tested social security benefit in the UK that is intended to help people with low incomes and low savings pay for rented accommodation. It is governed by one of two sets of regulations. For most people it is governed by the Housing Benefit Regulations 2006, but for those who are eligible for State Pension Credit it is governed by the Housing Benefit (Persons who have attained the qualifying age for state pension credit) Regulations 2006. It is administered, along with council tax benefit, by the local authority under whose control a property falls. Council tenants' housing benefit is credited directly to their rent accounts by the local authorities, whereas private tenants' benefit is sometimes paid to the landlord, and sometimes the tenant. Local authorities can reclaim the housing benefit they've paid from the Department of Work and Pensions (DWP), but only where a correct entitlement exists. In the event of an unrecoverable overpayment, the local authority suffers the loss, not the DWP.
Housing Benefit and Council Tax Benefit is generally only available to those who have permanent right to reside in the UK. If a person who does not have permanent right submits a claim, the Home Office may be informed, which could result in deportation.
Disclaimer: this page intends to show the theory behind the calculation of Housing Benefit and must not be used as an official guide or proof as to whether one would or would not qualify for Housing Benefit.
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[edit] History
Housing benefit evolved out of subsidies for council housing. In the 1980s, the Conservative Party policy was to withdraw from building more council houses, and housing benefit was introduced in 1982 primarily to make it easier for low-income tenants, who would otherwise be dependent on social housing, to move into private rented accommodation, thereby preventing widespread homelessness that might have otherwise resulted from the Right to Buy Scheme.
Critics contend that the restrictions that have been placed on Housing Benefit make it woefully inadequate in preventing homelessness.[citation needed]
[edit] Concepts and Terminology
Housing Benefit has some jargon associated with it. Central to the benefit are eligible rent and ineligible rent. Eligible rent is that part of the rent paid by a person which can legally be covered by housing benefit. Ineligible rent is that part of the rent paid by a person which they must pay themselves even if they have full Housing Benefit paid to them. The payment of the benefit is centred on the concept of a benefit week, which is a seven day period running from a Monday to a Sunday. Benefit is paid four weeks in arrears.
[edit] Local Housing Allowance
As of 2005, The Labour Party government is planning to replace Housing Benefit for private tenants with a scheme called Local Housing Allowance. It is means tested and tapered in exactly the same way as Housing Benefit - however, the eligible rent is fixed for a family of a given size in a given area, and is not set by the Rent Service. It is not even restricted to the amount of rent the tenant pays; if the tenant moves into cheaper accommodation, the tenant gets to keep the difference. It also does away with the need for Pre-Tenancy Determinations.
It is not planned to introduce Local Housing Allowance before April 2008 at the earliest. Local authorities that are trialling the new system are known as Pathfinder Authorities.
Local Housing Allowance has been trialled in the following local authority areas: Argyll and Bute, Blackpool, Brighton and Hove, Conwy county borough, Coventry, East Riding of Yorkshire, City of Edinburgh, Guildford, City of Leeds, London Borough of Lewisham, North East Lincolnshire, Norwich, Pembrokeshire, City of Salford, South Norfolk, Metropolitan Borough of St Helens, Teignbridge, London Borough of Wandsworth
[edit] Benefit restrictions for private tenants
In many cases, housing benefit will pay a private tenant's full rent, however, the benefit is not unrestricted. It will only pay whichever is the least of:
- the tenant's actual rent;
- the rent that would be reasonable in the area for the size of premises the tenant occupies; or
- the rent that would be reasonable in the area for the size of premises the tenant is considered to need for his/her family
This figure is the eligible rent, and is set by the Rent Service at least once a year for each property for which a Housing Benefit claim has been made.
[edit] Council and Housing Association tenants
For those who rent from their Local Authority, there is no issue with regard to the rent liability. Each Local Authority has a responsibility to their tenants and the rest of the inhabitants of the authority's area to keep the rents of the local authority properties at a reasonable level, regardless of housing benefit. As a result of this, the eligible rent for tenants of Local Authority properties will be their full rent, minus ineligibles.
[edit] Benefit taper
If a claimant is receiving income support or income-based Jobseeker's Allowance, or if their income is no higher than what they would receive on Income Support if they had no income or savings at all - then their housing benefit will be their full eligible rent.
If a claimant's income is higher than what they would theoretically receive on Income Support, then a deduction is made from their housing benefit entitlement. Housing benefit is reduced at a rate of 65p for each £1 of excess income. The first £6000 of savings are ignored. After that, each £500 of savings for pensioners, and £250 for non-pensioners, are considered to be equivalent to £1 of weekly income.
The amount of this deduction is known as the taper, and in this way, housing benefit is means tested.
Council Tax benefit is tapered in a similar way, at a rate of 20p per £1 income.
[edit] Non Dependent Deductions
A Non Dependent is a person that the claimant is sharing their accommodation with, who the claimant does not have caring responsibilities for. In general, this means adults who are neither elderly nor disabled. Deductions are made from housing benefit for non dependants.
Non Dependent deductions (NDDs) are only applied for people living within the premises that the claimant is entitled to occupy under their tenancy agreement. A person or couple who lives in a bedsit or flat-share is not allowed to occupy the other rooms in their house, and therefore they will not be charged NDDs for people who live in those other rooms. However, they will be charged NDDs for anyone they invite to stay in their own room.
As a general rule, a person's Housing Benefit entitlement will be their eligible rent, minus the taper, minus the non dependent deduction.
[edit] Pre-tenancy Determination and No DSS
In theory, prospective tenants can find out whether housing benefit will pay for a particular property or not, by asking the local authority for a Pre-Tenancy Determination, which is a report from the Rent Service about what the eligible rent would be for that property. The prospective tenant needs to get permission from the landlord for this, because the Rent Service will need to gain access to have a look at the premises.
However, when classified advertisements for lettings say No DSS, it usually means that the landlord is not willing to consider letting to a tenant who will be dependent on housing benefit to pay the rent.
In practice, lettings agencies will usually get a credit reference on prospective tenants, and once they've moved in, they don't care whether tenants claim housing benefit or not, as long as the rent is paid on time. However, lettings agencies don't want to pay credit reference agency search fees for prospective tenants unless there's a good chance they'll pass; and tenants who admit they're worried about housing benefit are generally considered too risky. As a result, applying for a Pre-Tenancy Determination can result in tenancy offers being withdrawn.
[edit] Changes in circumstances
Local authorities advise tenants that if their circumstances change, they must notify the housing benefit office "immediately".
In the event that a tenant's circumstances change such that they might become entitled to more housing benefit (for example, a fall in income), they must notify the local authority within one month, or lose some of this entitlement.
If a tenant's circumstances change such that they become entitled to less housing benefit, then the tenant could be charged with fraud if they do not inform the local authority within a reasonable amount of time. However, there are restrictions on what local authorities are allowed to do to recover such overpayments.
In practice, this means that tenants who do contingent work, have fluctuating income, or whose circumstances change frequently for other reasons, must report to the housing benefit office on a monthly basis. There are no standard forms for such reporting, and each week's income is likely to be treated as a separate change in circumstance. As a result, it can be very complicated to check that housing benefit taper deductions are correct if a tenant's income fluctuates. Critics of the system contend that this is a powerful disincentive for unemployed people to find work, particularly if they suffer from mild disabilities or learning difficulties.
[edit] Treatment of overpayments
The local authority can deduct overpayment debts from ongoing entitlement to housing benefit. As of 2006, this rate is a maximum of £8.70 per week, plus half of any 'earned income disregard' which applies to the claimant's income. This means that the maximum standard deduction could be £21.20 per week, if an earned income disregard of £25.00 would normally apply. The only exception to this is in overpayments where the claimant has been convicted or has admitted to fraud, at which point the overpayment can be recovered at a maximum of £11.60 per week plus half the earned income disregard. However, the recovery amount may vary at the Local Authority's discretion.
The recovery amount from ongoing entitlement is affected by the amount of weekly normal entitlement. The minimum housing benefit that can be paid, regardless of overpayment recovery, is 50p per week. For example, if the entitlement is £7.50 and the overpayment recovery level is £8.70, the claimant will receive 50p every week until recovery is complete with £7.00 going towards the overpayment.
If the claimant is no longer entitled to housing benefit, the local authority can also send the claimant a bill for it. If the claimant doesn't pay, the local authority has roughly the same legal means to recover it as other unsecured creditors, such as credit cards and utilities. Unlike council tax debts, the tenant cannot be put in prison for non-fraudulent overpayments.
If the housing benefit was paid directly to the landlord, and the landlord is expected to have been aware of the overpayment (such as failure to disclose ineligible service charges, benefit exceeding the actual rent, and benefit paid past termination of tenancy or tenant's death), the local authority can hold the landlord liable for the overpayment.
However, housing benefit for private tenants is only paid directly to the landlord if the tenant has requested this, or if the tenant has failed to pay the landlord despite receiving payments for housing benefit. Also, if the tenant is normally in receipt of benefit payments, and is expected to be more than two months in arrears due to suspension of housing benefit, the next payment could be sent directly to the landlord unless proof is given that the rent has been paid.
For council tenants, if an overpayment is created due to claimant error and no further entitlement is granted, the benefits office may recover the overpayment amount from the rent account, providing that the rent account is in credit, and that the deduction will not cause arrears on the rent account.
[edit] See also
- Section 8 (housing) - analogous U.S. program
- Low-Income Housing Tax Credit - U.S. housing subsidy program for new construction and rehab.
[edit] External links
- Housing Benefit advice from Shelter
