30 November 2010
Ministers have confirmed that they will delay cutting Housing Benefit for existing claimants, and will introduce incentives for private landlords to drop their prices.
Caps to the benefit were originally to be introduced next April, under plans revealed in June’s Budget. But welfare reform minister Lord Freud said today that many current tenants will have until January 2012 before the limits are imposed, as the caps will not apply until nine months after their claim is reviewed by their local authority.
Freud said the stay of execution would give families time to adjust to the reduced support. He also announced that a further £50m had been set aside to help councils negotiate lower rents and help families move house where necessary. This comes on top of £140m already announced for similar purposes. However, it is not yet clear which budget the new money will come from.
More cuts to Housing Benefit for private tenants, lowering the top rate paid from the median rent in an area to the thirtieth percentile, will now come into effect earlier than planned. This has been caused by changes to the Local Housing Allowance formula – which calculates the Housing Benefit payments for private tenants. Originally scheduled for October 2011 these will now come into effect in April.
Ministers said that synchronising the Housing Benefit caps for new ‘customers’ would avoid families being disrupted twice.
Local authorities will also be given discretionary powers to make direct payments to landlords who cut their rents. Normally the benefit goes to tenants who then pay the rent to their landlords.
But ministers said this was only likely to be a temporary arrangement to drive down private rental costs, and would not become the norm.
Freud said the incentive would 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,’ he said.
Sir Steve Bullock, executive member for housing at London Councils, welcomed the move. He said it would give councils some leeway to help people find alternative accommodation elsewhere.
But he added: 'While these are steps in the right direction, these measures alone will not solve the problem of housing supply in London entirely. There must be wider recognition that it is more expensive to rent in London than other parts of the country. Otherwise there will be continued pressure on the supply of homes in the private rented sector and on council budgets, which are already feeling the strain.'
Chartered Institute of Housing chief executive Sarah Webb said: 'Some positive concessions have been secured by the sector, but there remain a number of unresolved issues to work through.
'We still anticipate a significant impact on low-income households from the multiple Housing Benefit reforms and the potential long-term social and economic consequences of these changes.'
