Housing Benefit
From Wikipedia, the free encyclopedia
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 have reached the qualifying age for State Pension Credit (regardless of whether it has been claimed) 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 in whose area the property being rented lies. For those areas where there is two-tier local government Housing Benefit is administered by the district council layer of local government.
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 reclaim the housing benefit they've paid from the Department of Work and Pensions (DWP) by means of submitting a subsidy claim. The Department for Work and Pensions pays local government an administration grant based on caseload and various other factors announced each financial year and benefit subsidy to reimburse correctly-paid housing benefit payments. In the event of local authority error causing housing benefit to be paid incorrectly, the local authority suffers the loss, not the DWP.
Housing Benefit is available only[citation needed] to those who are liable to pay rent and 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. Housing Benefit cannot be awarded without the claimant and any partner having a valid national insurance number or are in the process of obtaining one.
Contents |
[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 usually paid four weeks in arrears.
[edit] Local Housing Allowance
The Labour Party government has legislated 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. It will not be restricted to the amount of rent the tenant pays; if the tenant moves into cheaper accommodation, the tenant gets to keep the difference (up to a maximum of £15). It also does away with the need for Pre-Tenancy Determinations.
Local Housing Allowance will be introduced across all Local Authority areas on 7 April 2008. The legislation to enable the scheme is contained in the Welfare Reform Act which received Royal Assent in May 2007. Several local authorities that have trialled 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.
Under the Local Housing Allowance (LHA) scheme, the eligible rent will be determined by the room requirement of the resident family and the area in which they live, rather than the construction of their property.
The room requirement is calculated in the same way as for Indicative Rent Levels under the previous Deregulated scheme of Housing Benefit. It is calculated as follows:
Bedrooms:
- one bedroom for each single adult (over 16) in the property and/or
- one bedroom for each adult couple (over 16 - including same sex couples)
- all children are considered to share one bedroom except in the following circumstances:
- a bedroom each for children of different sexes once the eldest reaches the age of 10 and/or
- a bedroom each for children of the same sex once the eldest reaches the age of 16.
Living Rooms:
- one living room where there are 1-3 people resident in the property
- two living rooms where there are 4-6 people resident in the property
- three living rooms where there are 7 or more people resident in the property
Although the intention is to roll out LHA for April 2008, a complex system of transitional arrangements will exist until at least April 2009.
In the Pathfinder and Second Wave Group of Local Authorities (those detailed in the Local Housing Allowance section above), any tenant who would have received less Housing Benefit under the LHA rules than under their previous scheme had their prior eligible rent protected until their LHA figure is higher than the benefit allowed under the previous scheme, after which time their eligible rent switchs to that set under the LHA rules.
Initially, where the LHA amount was more than the actual rent paid, the claimant was permitted to keep any excess Housing Benefit paid over and above their rental liability. The rules have been amended for the national roll out of LHA so that claimants will only be awarded a maximum LHA of £15 per week over and above their eligible rent. Any existing claimant in the Pathfinder/Second Wave Group authorities who receives more than this amount under the existing rules will also have this extra protected for 52 weeks, after which time the £15 maximum excess will apply.
All new claims made after the roll out date will fall under the new LHA scheme.
[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.
Housing Association tenants will similarly usually experience no restriction to the amount of rent that is eligible for benefit but where a local authority considers the rent to be unreasonably high it may be referred to The Rent Service and a restriction may be applied.
[edit] Benefit taper
If a claimant is receiving income support, income-based Jobseeker's Allowance, or Pension Credit Guarantee or if their income is no higher than what they would receive on those benefits if they had no income or savings at all - then their housing benefit will be their full eligible rent. This is the maximum housing benefit they can get.
If a claimant's income is higher than what they would theoretically receive on Income Support, income-based Jobseekers' Allowance or Pension Credit Guarantee then a deduction is made from their maximum housing benefit entitlement based on how high their income is above those benefits. Housing benefit is reduced at a rate of 65p for each £1 of excess income. The first £6000 of savings are ignored. If there is more than £6000 in savings each £500 of savings (or part thereof) will result in an extra £1 a week in income being assumed in the calculation of income.
The amount of this deduction is known as the taper, and in this way, housing benefit is means tested.
[edit] Non-Dependant Deductions
A Non-Dependant is a person that the claimant is sharing their accommodation with excluding a partner and dependent children (generally someone they are getting Child Benefit for). In general, this means adults who are neither elderly nor disabled. Deductions are made from housing benefit for non-dependants. The principle of non-dependant deductions is that other adults living in the home should contribute towards their housing costs and this should not be covered by housing benefit. The amount of the non-dependant deduction is set in the benefit regulations and is based on the gross income of the non-dependant.
Non-Dependant 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-dependant 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 may 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] Council Tax Benefit
Council Tax Benefit is assessed in the same manner to housing benefit, with a few differences. Whereas housing benefit uses the weekly rent as a basis for assessment, council tax benefit uses the weekly amount from the claimant's council tax account. Any deductions to the account, such as discounts and exemptions, are taken into account (so that the claimant's council tax benefit award should never exceed the actual bill).
Excess income and non-dependent deductions are calculated in the same way as housing benefit, except that only 20p of excess income is used to reduce the benefit entitlement, and non-dependent deductions are significantly lower.
The benefit is used to reduce the bill automatically - the claimant does not receive the money themselves. Usually, a separate application for council tax benefit is not required, and the council tax benefit would be assessed at the same time as housing benefit, if the claimant is eligible for both.
[edit] Second Adult Rebate
In some cases, where the account holder would not normally be entitled to council tax benefit due to income, but is living with a second adult who is in receipt of Income Support or Jobseeker's Allowance (or another low income), second adult rebate could be granted. The second adult should not be jointly responsible for paying the council tax and should not pay rent to the council tax payer. The application process for this is the same as for council tax benefit.
[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] Appeals
A decision by the local authority not to grant housing benefit may be appealed to the Social Security Appeal Tribunal
[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
