Press release

Housing Benefit reforms will restore fairness to broken system

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Ministers today reaffirmed their determination to drive private sector rents for Housing Benefit recipients down.

Ministers today reaffirmed their determination to drive private sector rents for Housing Benefit recipients down, and stop taxpayers paying over the odds by announcing discretionary powers for local authorities to make direct payments to landlords in return for reducing their rents. The announcement comes as Housing Benefit Regulations are laid in Parliament today.

The Government is taking necessary steps to manage Housing Benefit costs and are implementing all Local Authority Housing Allowance measures announced in the emergency Budget in June 2010.

To avoid families being disrupted twice, first by the Caps in April 2011 and then by the reduction in Local Housing Allowance to the 30th percentile in October 2011, they will now both come into force in April 2011 for new customers.

However, existing customers will be exempt for up to 9 months from the date their claim is reviewed by their local authority. This will allow them time to adjust to any reduction in Housing Benefit entitlement and in practice means many existing customers will not be affected until after January 2012.

Ministers have also announced today a further £50 million has been allocated over the Spending Review period to support these measures, such as helping local authorities to negotiate lower rents and helping those that do need to move.

In addition, from April 2011, claimants who meet the criteria will immediately become entitled to an additional bedroom space for a non residential carer.

Minister for Welfare Reform, Lord Freud said:

We are looking to private landlords to respond to the need for lower rents and in return we are prepared to permit direct payments from the state.

This incentive will bring an overall downward pressure on rents in the private sector. As these rents come down, more properties will become available to claimants and landlords will have certainty that their income will be protected.

However, Ministers are clear this is likely to be a temporary agreement to provide an incentive to landlords to lower their rents and is by no means a return to direct payments being made to landlords as a matter of course.

Notes to Editors:

  1. The published Housing Benefit Regulations can be found at www.dwp.gov.uk/local-authority-staff/housing-benefit/claims-processing/local-housing-allowance/regulations/
  2. Other measures being introduced through the Housing Benefit Regulations laid in Parliament today include:
    • Withdrawal of Local Housing Allowance so that it will no longer be paid for 5 bedroom plus homes.
    • Local Housing Allowance will be capped at £400 for a 4 bed home, £340 for a three bed home, £290 for a two bed home and £250 for a one bed home.
    • Removal of the £15 weekly Housing Benefit excess which some customers can receive under the Local Housing Allowance arrangements.
  3. In addition to the £50 million announced today we have already made a £130 million available over the next 5 years through the Discretionary Payment Scheme to help with the transition. A further £10 million has been made available immediately to ensure people can access advice and support.