Simplifying the welfare system and making sure work pays

Supporting detail:

Making sure housing support is fair and affordable

We are creating a fairer approach to Housing Benefit to bring stability to the market and improve incentives to work.

Housing support under Universal Credit

Universal Credit is a new single payment for working age claimants that we are introducing 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.

Universal Credit will include an appropriate amount to help meet the costs of household rent or mortgage interest.

Changes to housing support in the social rented sector and the private rented sector

We have introduced 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 brings them in line with those renting in 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 no longer receive help towards the costs of a spare room. They will receive help towards their housing costs based on the need of their household.

The new rules allow 1 bedroom for each person or couple living as part of the household with the following exceptions:

  • children aged under 16 of the same gender are expected to share
  • children aged under 10 are expected to share regardless of gender
  • a disabled tenant or partner who needs a non-resident overnight carer is allowed an extra room

Children who cannot share a bedroom because of a disability or medical condition may be entitled to an extra room. Claimants will need to contact their local authority and will be asked for medical evidence to support their claim.

On 12 March 2013 we clarified how these rules affect foster carers and armed forces personnel.

An additional bedroom will be allowed where the claimant or their partner is caring for a foster child or has been accepted as a foster carer but has no child living with them as long as the period without a child does not exceed 52 weeks.

An additional bedroom will be allowed for adult children who are in the armed forces and continue to live with their parents, even when they are deployed on operations. This means that the size criteria will not apply to the room normally occupied by the member of the armed forces.

The new rules mean that those tenants whose accommodation is larger than they need may lose part of the money they get towards their housing through Housing Benefit or Universal Credit. Their eligible rent will be reduced by:

  • 14% for those with 1 spare bedroom
  • 25% for those with 2 or more spare bedrooms

There is more information in the under-occupation of social housing impact assessment.

Direct Payments in the social rented sector

We believe that Universal Credit payments should replicate as far as possible how people are paid when they are in work. We want to see very many more people handle their own benefit and rent payments.

Housing costs within Universal Credit will be paid directly to individuals in the social rented sector, rather than the current system of payments direct to landlords. 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 creation of new homes. We have included safeguards in Universal Credit to help protect landlords’ income.

We have also put in place support mechanisms for tenants who may need help managing their finances.

Direct Payment demonstration projects

A number of local authority and housing association partnerships are working with the government to test changes to 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 began in June 2012 and have been extended to December 2013. They 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 projects will help us 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

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

In May 2013 we published feedback from the projects following the first 9 payments of Housing Benefit direct to tenants.

Lord Freud, the Minister for Welfare Reform, gave a speech about direct payments in the social rented sector on 14 September 2011.

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