Local Government Lawyer Insight July 2017 LocalGovernmentLawyer 37 Social housing is dependent on rental income to remain financially viable. Much of this income is currently dependent on Housing Benefit. The imminent changes are expected to have significant implications for housing providers and their tenants. In principle, the public, those providing support to vulnerable groups and housing providers understand the need for welfare reform, with the true aim being to provide assistance to help people back to work and stability. Despite the Government’s commitment to exclude single people under 35 who fall within specified vulnerable groups from the full impact of the benefit cap (by committing to pay the one-bedroom rate rather than the Shared Accommodation Rate (SAR)) there will undoubtedly be a significant impact on many households and particularly young people under 35 and care-leavers. Households, already severely stretched and increasingly dependent on charities and food banks, will struggle and there is a real risk of more people becoming homeless or falling below the poverty line. Major reform to the benefits system has been taking place in the last few years, including introduction of the Benefit Cap, the bedroom tax, the 1% annual rent reduction imposed on social landlords and the continuing roll out of Universal Credit as the impact of the Welfare and Work Act 2016 begins to bite. Registered providers make a significant contribution to reducing the overall welfare bill by providing employment apprenticeships and skills services, helping people off benefits and into sustainable work. Providers put considerable time and energy into supporting struggling tenants and focusing on their own business planning to manage the challenges and risks to this business, creating innovative new ways to provide new homes and services, whilst maintaining stability and provision for tenants. Changes to benefits Tenants of social landlords of working age who claim housing benefit, face a reduction in their weekly allowance if they have 'spare' bedrooms, known as the “bedroom tax” or the under-occupancy charge. The benefit cap was reduced in November 2016 from £500 per week for families with children to £384.62 per week outside London or £442.31 per week within Greater London. Single people without children have seen their weekly benefit reduced from £350 to £257.69 outside London or £296.35 within Greater London. There is an annual cap of £20,000 outside London, or £23,000 in Greater London. From April 2019 tenants in receipt of Universal Credit will have their benefit for housing costs capped at the LHA rate and will no longer be able to claim housing benefit. Housing benefit claims have already been limited for new tenancies from April 2016, as those new tenants are restricted to claiming the LHA rate. This restriction includes people over pension age. For people under 35 this cap will be set at Shared Accommodation Rate (SAR) unless an exemption applies. Prior to November 2016 there were already increasing claims for Discretionary Housing Payments (DHP). A DHP is an extra payment to help people who claim housing benefit and are struggling to pay the rent, for example due to the impact of the benefit cap or bedroom tax. It was reported by the Chartered Institute of Housing that before the reduction, households affected were predominantly clustered in London, due to higher housing costs, but the move to a regional rate, as well as a reduction for all claimants means far more people will have their benefits cut. Housing benefit will be abolished and a new system will have to be established to cover housing costs in supported and sheltered housing. The DWP identify it as a more ‘localised system’ to cover the housing costs for Universal Credit claimants, but we are still no clearer on what that process will be. The DWP figures demonstrate that since the introduction of the cap in April 2013 until May 2016, 76,000 households had their benefits capped. Most of these households were in London, and most capped households included children. This Weathering welfare reform Sarah Mansfield looks at the effect of recent and forthcoming welfare changes on social housing landlords and their tenants.