There are few issues that unite the Archbishop of Canterbury, Boris Johnson, the Council of Mortgage Lenders and the National Housing Federation. But the impact of housing benefit changes on tenants and landlords has managed to unify this disparate bunch, with dramatic warnings of “social cleansing” coming from the Mayor of London and the CML pondering whether providing funding for housing associations is a good idea in future.
However, the impact of the recent and proposed housing benefit changes on social care clients and departments has been slightly overlooked.
So what are the changes, when will they happen and how will they affect your clients?
1 Housing benefit for all private sector rents is now based on the 30th percentile of rents in an area, not the 50th, for new tenants. It will be phased in for existing tenants between January and December 2012.
Put simply, it means they will have to find somewhere to live in the bottom third of the local housing market. For example, a private sector tenant may be renting now at £200 a week and receiving housing benefit to cover it. But at some point in the next 16 months, they will be told that the maximum that they can claim will be cut to, say, £170 a week. So what are their options? Move? Work illegally to make up the shortfall? Ask social services for financial help? Use moneylenders? All of those options affect family life and none of them positively.
2 From April 2013, increases in this benefit will be based on rises in the consumer price index rather than rent. That could compound the original problem.
3 These aren’t the only caps. Since April 2011, housing benefit for private sector tenants has been limited to the appropriate rent figure for a four-bedroom property no matter the size of the home. So large families in private rented houses with five or six bedrooms have found that the help they can receive through housing benefit has been severely reduced. Again, options are limited – and include over-crowding and what social care professionals may see as “inappropriate” sharing of bedrooms by adolescent and younger children.
4 Sitting alongside this cap is the one that led Boris Johnson to describe the “social cleansing” of benefit claimants from central London. In April 2011, absolute caps were placed on housing benefit for everything from bedsits to four-bedroom properties. The caps are set at a level where most of the country can safely ignore them. But in Westminster, for example, research showed that there was no rented accommodation available at or below the cap level.
5 One of the more controversial caps will be applied to working-age tenants in social housing. This is called the introduction of size-related criteria. For example, housing benefit would be limited to less than the actual rent if an unemployed or disabled couple in their fifties were still living in a three-bedroom house once their adult children had left home.
Leaving aside the impact this will have on “ordinary” households – 670,000 will be affected from April 2013 with an average loss of £13 a week – it also affects foster carers. That’s because foster children do not count as family members so are excluded when deciding how many bedrooms a claimant “needs”. That has always been the case for private tenants but extending it to social housing will bring many more foster carers into scope of this restriction. One solution in some cases would be for the foster carer to become special guardians instead, and for the children to come out of care – and this could be the case for friends and family or kinship carers too. However, this could see them hit by our next capping.
6 From April 2013, a limit, based on average incomes, will be placed on a families’ “total benefit income”. This is estimated to be £500 a week for couples and the detail shows a major impact on social care clients. If a three-child family receives jobseekers’ allowance, child benefit and child tax credit of £320 a week, housing benefit would be capped at £180 a week – which is less than the normal rent for a three-bedroom private property in most parts of the UK. Family Rights Group has examples of aunts, uncles, grandparents and older siblings taking on the care of two or more extra children – and the additional (and vital) child benefit and child tax credit that the children bring with them being enough to take the carer over the capping level. Will it then fall on hard-pressed local authorities to make up the shortfall in rent?
There are exceptions to this cap for families that include someone on disability living allowance or where a parent is working, but those 50,000 households will still lose out, on average by £93 a week, and 30% of those households will be from ethnic minorities.
7 Much of the above has related to private sector tenants but social housing rents will soon be rising, so issues like the total benefit income cap could apply across all housing types. Rents will rise because of the introduction of what are rather mysteriously called affordable rents – new tenants in social housing could be charged up to 80% of the market rent in future, narrowing the gap between private and social sector housing. Even those in social housing who do not receive housing benefit (and about 65% do) will find it more difficult to meet these rents when or if they take on a new property.
8 There have already been significant (above-inflation) increases in non-dependent deductions. Again, it’s not a subject to bring people to the barricades, but these deductions represent what other residents are expected to contribute towards the tenant’s housing costs and are often a cause of considerable family tension between tenants and their older sons and daughters.
9 But if those sons and daughters move out to rent somewhere on their own, they may have a shock if they need housing benefit for some or all of their rent. That’s because, from January 2012, people aged 16-34 will normally have their housing benefit limited to a bedsit or shared accommodation rate, not the rate for a one-bedroom place. This is now the case for 16- to 24-year-olds but “young people” now means anyone under 35. There will be exceptions – lone parents, people who are severely disabled and others – but the general rule will apply to most “young people”, with 88,000 losing on average £50 a week, according to the Department for Work and Pensions.
10 Finally, from October 2013 universal credit will replace all the working-age means-tested benefits and tax credits, including housing benefit. It will mean one payment, administered by the DWP, to cover the claimant, their children and their housing costs. This could mean that the rent element of universal credit is paid to the tenant, not their landlord, except in “vulnerable” cases. This already happens in the private sector; if extended to social housing, what will be the impact on the young people, families and people with mental health or substance abuse problems that you help?
Some individuals and families could be affected by a number of these changes over the next two years. Imagine a recently unemployed couple with four children and a working son still living at home, renting in the private sector. Their housing benefit will be reduced because they are in a five-bedroom property but the maximum is the figure for a four-bedroom. It’s still above the 30th percentile, however, and the working son’s share of the rent – the non-dependent deduction – has just been increased too. Their rent goes up by £20 a week but the CPI rate of inflation means they receive an increase of only £10. By 2013, if still unemployed, their total benefit income will be capped if it exceeds £500 a week anyway – and so on.
So far, the social care world has tended to see this primarily as a housing or finance issue. I hope that is no longer the case.
Gary Vaux is head of money advice at Hertfordshire Council.