Housing benefit provides a state-funded rent allowance to many millions of tenants in both the public and private rented housing sectors. Housing benefit is an allowance paid to the tenant and legally required to be used by them for a specific purpose.
The original housing benefit scheme was introduced in the early 1980s, and was most recently revised by the Housing Benefit Regulations 2006. The scheme is intended to help those on low income by paying all or some of the rent or charges for the dwelling that is normally occupied as their home. It is provided by central Government and administered locally.
A person will be eligible to apply for housing benefit where:
- they are liable to pay charges in respect of their home (there need not be a written tenancy agreement but their liability to pay must be legally enforceable),
- they are on a low income (normally because they are unemployed), and
- their savings and capital assets are not worth more than £16,000
A person can apply for housing benefit if they are employed or unemployed but if that person lives with a partner, only ond of them can claim Housing Benefit. A person who is single and under the age of 35 can only get Housing Benefit for bed-sit accommodation or a single room in shared accommodation.
The person who is liable for the rent, the tenant, is normally the person who must apply to their local authority for housing benefit. Some people may not be entitled to housing benefit even if their income is low enough to qualify, such as where the claimant lives with their landlord who is a close relative or where the tenancy is not conducted on a commercial basis.
All housing benefit claims must be made in writing, and the date that the local authority receives the written claim will determine the date from which the benefit is payable. However, claims that do not contain all of the information required will be treated as incomplete/defective claims, and may cause delay to the receipt of benefit payments. It is advisable that tenants of privately rented property apply directly to the local authority for housing benefit, rather than alongside an application for income support or jobseeker’s allowance, as this ensures that all of the required information is provided. Delays in reaching a decision as to the payment of any other type of benefit would result in delays in the decision whether housing benefit is paid.
Housing benefit claims can be backdated for a maximum of 3 months for people who have reached the qualifying age for a state pension, and for a maximum of 6 months for working age claimants. This will only apply where the claimant can show that they had continuous good cause for not making a claim, such as continuous illness (and they did not have anyone else able to make a claim on their behalf).
The Benefits Cap limits the amount of total benefit that a person is entitled to. The Benefits Cap is calculated depending on whether that person is a couple or a single parent living with or without children. From autumn 2016 the Benefits Cap will depend on where the tenant lives in the UK as different rates apply if the tenant lives inside or outside Greater London. It has been indicated by the government that where a person's total benefits claim is calculated above the cap level it will be the Housing Benefit element that will be reduced.
Local Housing Allowance
In April 2008 a new scheme system for working out housing benefit entitlements for tenants renting accommodation from a private landlord was implemented, in order to provide a fairer and simpler system.
The housing allowance that is payable within the same local area has been standardised, as under the previous system tenants with similar housing needs received different rent levels within the same area. Accommodation was also often of differing standards depending on its size or quality.
However, the new local housing allowance (LHA) system does not affect tenants who rent from a local authority or a registered social landlord.
There are two main differences between the LHA and the previous system of Rent Allowance (RA):
Firstly, the LHA system simplifies the calculation of the rent payable, by simply looking at the size of the household to be accommodated and giving a fixed amount regardless of the property they rent. The amount of LHA that a claimant can receive will depend on:
- the area in which the claimant lives
- the number of people who live in the claimant’s family
- the claimant’s financial circumstances (including income, savings etc.)
The previous system involved assessing each property individually and calculating the rent payable according to a complex set of rent levels.
Secondly, under the LHA system, the housing benefit is normally paid straight to the claimant. There is no facility to pay it directly to the landlord or agent just because they request this. Direct payments to the landlord are available at the discretion of the local authority.
Tenants who privately rent will be subject to the new LHA system where the tenant:
- is making a new claim for housing benefit on or after 7th April 2008
- is making a change of address claim on or after 7th April 2008
- has a break in their claim for Housing Benefit on or after 7th April 2008
The previous RA system will continue to apply to:
- tenancies which started before 1989, or where rent is registered as a ‘fair rent’
- tenancies and occupiers of caravans, house boats or hostels
- tenancies where a substantial part of the rent is payment for meals, board and attendance (e.g. bed and breakfast type lodgings)
At the time of writing the Government propose a further development to the benefits system introducing one single payment known as Universal Credit which will replace certain benefits including Housing Benefit.
Universal Credit is a single means tested benefit for people aged 18-60 who are unemployed or on low paid work. It aims to simplify the benefit system meaning claimants will only have to report personal information and changes to one agent. Universal Credit is being introduced in stages and the Government aim a national roll out by 2017.