Welfare Reform 2013: Benefit Cap and Under-Occupancy

Presentation for HCVS February 2013

Total Benefits Cap

What is the Benefits Cap?

The total amount of benefits that working age people can receive will be capped at a maximum amount.

This cap will be set at: £350 a week for single individuals. £500 a week for couples£500 a week for lone parents.

This will ensure individuals who are out of work, no longer receive more money than what they could reasonably expect to earn if working.

When will the Cap commence?

The Cap is being phased in across the country from April 2013.

The cap will first be implemented in the boroughs of Bromley, Croydon, Enfield, and Haringey from April 2013

It will be implemented in Hackney over the summer.

We do not yet know the exact start date for Hackney. However the cap will be implemented nationwide by the end of September at the very latest.

It is not going away and residents still need to act now.

How will the cap work?

The DWP will add up the total income a household receives from:

Job Seekers Allowance Income Support

Employment and Support Allowance Housing Benefit

Child Benefit Child Tax Credit

Bereavement Allowance Widowed Parent’s Allowance

Guardian’s Allowance Incapacity Benefit

Severe Disablement Allowance Widows Pension

Mothers Allowance Carer’s Allowance

How will the cap work?

Where a households weekly income from state benefits is above the cap then Housing Benefit will be reduced until the total income is at the cap level.

So if a households total weekly income comes to £600 and they are subject to a £500 cap then the Housing Benefit will reduce by £100 per week

By household we mean claimant, partner, and all dependant children under 18 or receiving Child Benefit.

The income of other adult occupiers (Non Dependants) in the household is not included in the Cap.

ExampleA couple with two children could receive the approximate following weekly income from April:

Job Seekers Allowance £112.55Child Benefit £33.70Child Tax Credit £114.78Housing Benefit £296.38

Total Weekly Income from Benefits =£557.41

When the cap is introduced, as their income from benefits is over £500 the Housing Benefit would be reduced by £57.41 a week.

This means they would only receive £238.97 in Housing Benefit and would have to pay a further £57.41 themselves.

Are there any exemptions? - Disability

Where a claimant, partner or their dependent child receives one of the following disability benefits the total benefit cap will not apply to them.

These benefits are: Attendance Allowance War Widow/Widower’s Pension Disability Living Allowance (DLA) or its replacement Personal Independence Payment (PIP) Industrial Injuries Benefits Armed Forces Compensation Scheme payments War Pension Scheme payments (including War Widow’s/Widower's Pension and War Disablement Pension) Employment and Support Allowance – Support Component Only

What other exemptions exist?

Individuals over Pension Credit Age are exempt from the CAP.

While Housing Benefits remains, if you have a couple where one is over Pension Credit age they will be exempt from the CAP.

Individuals with an underlying entitlement to Working Tax Credit are also exempt from the CAP.

If you live in “Supported Exempt Accommodation”, then the Housing Benefit is excluded as income when calculating whether a household is capped.

(Supported Exempt Accommodation means, accommodation which is provided by a housing association, a registered charity, a non for profit making voluntary organisation, and that body or someone acting for them provide the resident with care support or supervision).

How do households prevent a shortfall?

Finding work of enough hours to qualify for Working Tax Credits is for most people the only way to avoid the cap.

If tenants find work of enough hours to qualify for Working Tax Credit then they will be exempt from the cap. If customers have an underlying entitlement to WTC they should also be exempt.

To be entitled to Working Tax Credit they must work a minimum of: 16 hours a week for lone parents, 24 hours a week for couples, (with at least one working 16 hours)30 hours a week for single individuals over 25.

If individuals have worked for a year and lose their job through no fault of their own they will protected for 9 months (39 weeks) from the effects of the Benefit Cap.

A personal advisor at the JCP could help

Who is not exempt?

Where a household includes a Non Dependant (over 18 not receiving Child Benefit) in receipt of Disability Living Allowance they will not be exempt from the CAP.

Where a household is in temporary accommodation they will not be exempt

Individuals receiving Carers Allowance due to being a Carer are not exempt from the Cap.

How much will individuals lose by the Cap? The DWP have a on line calculator to help you estimate how much of your Housing Benefit you might lose due to the cap.

This can be found on Gov UK at:

https://www.gov.uk/benefit-cap

What does this mean for residents? For the majority of households affected the shortfall will be small.

It could be covered by their other income, and with some budgeting advice may have little effect on their ability to pay their rent.

For other households the solution could be a small rent reduction by the landlord which is often cheaper than re-letting the property.

But for some households the shortfall is large, and customers must act now to maintain their homes.

Any Questions?

Under Occupancy in the Social Rented Sector - “The Bedroom Tax”

Takes Effect from the 01/04/2013

What is the change?

Housing Benefit will be restricted for working age tenants in the social rented sector (Council and Housing Association Properties) who are occupying a property which is larger than they need.

This means social housing tenants will no longer be allowed to have one or more spare bedrooms without it reducing the amount of Housing Benefit they receive.

Who will these changes affect, and when will they apply?The reduction will apply to all working age Housing Benefit claimants who are deemed to have a spare bedroom in their home.

The change will apply to everyone affected from 1 April 2013.

This means existing claimants will have their benefit reduced straight away.

Pensioners will not be affected. This means individuals over Pension Credit Age (which will be 61 and 5 months as of April 2013).

Couples receiving Housing Benefit where one person is over Pension Credit Age will be exempt from the change.

How is under occupancy defined?

Under the proposals a tenant will be allowed one bedroom for each of the following who lives with them in their household: Every adult couple Any other adult aged over 16Any two children of the same sex under 16 Any two children under 10 One bedroom for any other child under 16 (other than a foster child or child whose main home is elsewhere)One bedroom for an overnight carer if appropriate

Unlike the private sector, the shared accommodation rate does not apply including restrictions for under 35’s.

ExamplesA single mother with a girl aged 11, and a son aged 8 will get three rooms.

One room for herself, one room for her daughter, and one room for her son.

A couple with two girls aged 15 and 8 would get 2 rooms. One for themselves and one for their daughters.

A couple with a boy aged 5 and a girl aged 8 would get 2 rooms. One for themselves and one for their two children.

How will individuals know if they are under-occupying?If the customer has more bedrooms in their home than the formula allows, they will be considered to be under-occupying

If a customer has one extra bedroom than the maximum rent used for calculating Housing Benefit will be restricted by 14%.

If they have two or more bedrooms than they need the maximum rent for Housing Benefit will be restricted by 25%.

Joint tenants

All occupants including joint tenants will be taken into account for the purposes of establishing under-occupation.

No account will be taken of how the joint tenants divide the rooms up among themselves.

If the customer is deemed to be under occupied the 14% or 25% reduction will be applied to the whole eligible rent which will be apportioned between the joint tenants.

This will take account of how they divide the rents between them where appropriate.

How will bedroom be defined?The number of bedrooms will be defined by the landlord.

If a bedroom has been converted to a different use such as a lounge, dining room, store room or study, it will still count as a bedroom when deciding whether a person is under occupied.

If a home was let as a three bedroom property then it will be defined as a three bedroom property when deciding on under-occupation.

It does not matter if a bedroom is a box room – it still counts as a bedroom, and two children will be expected to share.

How many Households in Hackney are affected?4102 working age households who will be affected

Hackney Homes:Total number of tenants affected: 2160Under occupied by 1 room:1607Under occupied by 2 or more rooms:553

Registered Providers:Total number of tenants affected: 1942Under occupied by 1 room:1439Under occupied by 2 or more rooms:503

Making sure our records are correct. The Benefits Service intend to write to all affected tenants, confirming how many individuals our records show reside in their home.

The letter will state that if this is incorrect, they should let us know immediately and provide proof of who is living with them..

These letters will go out shortly.

Making sure our records are correct. Tenants could report that they are not under occupied as another adult (Non Dependant) moved in to live with them several years ago.

However in some cases this could cause substantial Housing Benefit overpayments, and large ongoing non dependant deductions.

Non Dependant deductions will increase substantially in April 2013

Advisers must make sure their claimants understand how Non Dependant deductions work and how tenants could be affected if they declare other residents live with them.

Equally where a tenant is currently not under accommodated and:

a member of a tenants household such as a “adult son or daughter” moves out.

This immediately reduces the number of bedrooms which that tenant is entitled to.

Therefore the tenant could potentially be deemed to have a spare, bedroom, and have their Housing Benefit reduced by 14% from the Monday after the individual moved out .

Are there any exemptions?Customers of pension credit age

Those in shared ownership accommodation. This is where the claimant owns the property under a shared ownership lease, usually with a housing association.

Temporary accommodation. Any claimant who is accepted as homeless under homelessness legislation and placed by the local authority

Supported ‘exempt’ accommodation

The following will not be exempt They need a spare room to store essential medical equipment

Tenants who need a spare room as they can not share with a partner due to a medical condition or disability

Tenants who need spare rooms so their children or relatives can visit

Tenants who share childcare arrangements, but are not the primary carer for their children.

Tenants who need spare rooms because they have foster children, or are in between foster placements

Tenants who have spare rooms because their properties have been adapted due to a disability, such as for wheelchair use.

Solutions for affected tenants?

Make up the shortfall from other income and benefits

Move to alternative accommodation (mutual exchange)

Ask a friend or family member to move in

Take in a lodger (with landlords permission)

Find additional Income from employment

The above options may affect Housing Benefit entitlement

DHP- All awards are discretionary and will be considered on their own merits

What does this mean for tenants who are under occupied?

Just because a tenant is under occupied does not mean: They have to give up their tenancy, They have to take in a lodger They have to move to smaller accommodation.

What it does mean is if they take no action there will be a shortfall between their Housing Benefit and the amount of Rent they are charged.

According to the DWP, those tenants affected in London by under occupancy will face an average weekly loss of £21.00 a week.

How they cover this shortfall is up to the individual tenant.

Any Questions?