Updated 13 August 2012
Housing support
Welfare reform is a priority for the Government and Housing Benefit reform has been addressed in this wider context.
The Welfare Reform Act 2012 introduced a wide range of reforms that deliver the commitment made in the Coalition Agreement and the Queen’s Speech to make the benefits and tax credits systems fairer and simpler.
The Act has created a fairer approach to Housing Benefit to bring stability to the market and improve incentives to work.
Universal Credit
Universal Credit is a new single payment that will be introduced in 2013 for people who are looking for work or on a low income. It will replace a number of other benefits, including Housing Benefit. The Welfare Reform Act enables us to provide an appropriate amount of support to the Universal Credit award to help meet the costs of household rent or mortgage interest.
Pension Credit will be amended from October 2014 to include help with eligible rent.
Changes to housing support in the social rented sector and the private rented sector
The Welfare Reform Act introduces new rules for the size of accommodation that Housing Benefit, and then Universal Credit, will cover for working age tenants renting in the social sector. This will bring them in line with the private rented sector.
From April 2013 all current and future working age tenants renting from a local authority, housing association or other registered social landlord will receive housing support based on the need of their household.
The size criteria allows one bedroom for each person or couple living as part of the household with the following exceptions:
- children under 16 of the same gender are expected to share
- children under 10 are expected to share regardless of gender
- a disabled tenant or partner who needs a non-resident overnight carer will be allowed an extra room.
This means those tenants whose accommodation is larger than they need may lose part of their Housing Benefit:
- those with one spare bedroom will lose 14 per cent of their eligible rent
- those with two or more spare bedrooms will lose 25 per cent.
Further information can be found in the impact assessment:
Direct Payments in the social rented sector
In designing the Welfare Reform Act, Ministers considered how support for housing costs should be paid when Universal Credit is introduced, particularly for those in the social rented sector.
Ministers believe that Universal Credit should replicate as far as possible how people are paid when they are in work and want to see very many more people handle their own benefit and rent payments.
The Welfare Reform Act enables housing costs within Universal Credit to be paid directly to individuals in the social rented sector, rather than the current system of payments direct to landlord. This will encourage people to manage their own budget in the same way as other households.
The Government recognises the importance of stable income from rent for social landlords to support the delivery of new homes. Therefore Universal Credit contains safeguards to help protect landlords’ income. It will also ensure sufficient support mechanisms are in place for tenants who may need help managing their finances.
Direct Payment Demonstration Projects
A number of local authority and housing association partnerships are volunteering to work with the Government on changing the way housing support is paid in the social rented sector. The new projects will see some tenants in the social rented sector receiving monthly Housing Benefit payments, paid directly to them for the first time.
The projects, running from June 2012 until June 2013, will:
- test how tenants can manage monthly payments of housing costs ahead of the introduction of Universal Credit from October 2013
- look at the appropriate level of safeguards needed to help protect a landlords’ income if tenants fall behind on their rent
- look at the support tenants also need.
The local authority and social landlord partnerships named for the demonstration projects are:
- City of Edinburgh Council and Dunedin Canmore Housing Association, Scotland
- Southwark Council (the local authority landlord) and Family Mosaic Housing Association, London
- Oxford City Council (the local authority landlord) and GreenSquare Group Housing Association, Southern England
- Shropshire Unitary County Council (the local authority landlord) and Bromford Group Housing Association, Sanctuary Housing and The Wrekin Housing Trust, West Midlands
- Wakefield Metropolitan District Council and Wakefield and District Housing , Northern England
- Torfaen Borough County Council and Bron Afon Community Housing and Charter Housing Wales.
The projects will help government understand the best ways of
- communicating these changes to tenants
- providing assistance with budgeting to ensure tenants successfully pay their rent
- developing appropriate safeguards to protect landlords’ financial position if tenants do get into arrears
- supporting tenants and landlords experiencing financial difficulties.
