NEW IMPLEMENTATION ARRANGEMENTS FOR HOUSING BENEFIT CHANGES

The Government have now made the required regulations to bring in a number of changes to local housing allowance (LHA) and announced new implementation arrangements, including transitional provisions for existing claimants. Previously, the intention had been to stagger start dates but now there is a common implementation date, 1st April 2011. New claims after that date will be subject to the new rules with immediate effect. The following changes start on 1st April 2010:-

• LHA rates will be set at the 30th percentile rather than the median percentile point i.e. 50%. Roughly speaking this will lead to a 10% reduction in LHA rates but this will then vary from area to area.

• Claimants will no longer be entitled to an excess of up to £15 per week where their rents are less than the LHA rate.

• The five bedroom rate will be abolished so the maximum allowable now would be four bedrooms.

• Caps will be introduced so that LHA weekly rates cannot exceed £250 for a one bedroomed property; £290 for a two bedroomed property; £340 for a three bedroomed property and £400 for a four bedroomed property. This will only affect certain areas in London.

• An additional bedroom will be allowed where a disabled person/person with a long term health condition has a proven need for overnight care provided by a non resident carer.

In relation to direct payments to landlords the regulations have been changed on a temporary basis to introduce a new category so that local authorities can pay housing benefit directly to the landlord if it would enable the claimant to secure or retain the tenancy. Detailed guidance is awaited on the scope of this provision but the Government have said that beside this being a temporary measure it will apply in those cases where landlords are prepared to reduce their rents in line with the reduction of LHA rates. This will be a discretionary ground in addition to the existing safeguard/vulnerability grounds which apply where the claimant is likely to have difficulty in relation to the management of his/her affairs or it is improbable that the claimant will pay the rent. Landlords have the right to require direct payments where arrears exceed 8 weeks. This right is unaffected.

For existing claimants the reduction in rates to the 30th percentile, the maximum four bedroom entitlement and the introduction of the absolute cap (where it applies) will normally apply from the anniversary of the claim. However, they will be protected for a further 9 months from that date. If the claimant has a change in the composition of their household that affects their LHA rate before their anniversary they will be assessed under the new provisions from the date of the change. In these cases, they will only be transitionally protected for a further 9 months if the change in their household means that they are entitled to the LHA rate for a larger property and they would be better off if their previous LHA rate were used to calculate their benefit entitlement.

In other cases for existing claimants, the 9 month transitional protection period will continue from the date of the anniversary of the claim provided that the claimant continues to claim at the same address and there are no changes in their household which result in an LHA rate for a smaller property applying to their claim. Should a member of the household die during this period the existing 12 month protection following a death will continue to apply.

The removal of the up to £15 excess will apply to existing claimants on the anniversary of their claim or sooner if there is a change in the size of their household that affects the size of the property to which they are entitled or if they move. Thus, someone with an excess entitlement who first claimed LHA on the 21st March 2009 will lose normally the excess as from 21st March 2012. There is no transitional provision in this case.

The Government is making discretionary housing payments available and increasing the budget for these. However, it is likely that the extra money will only be available by and large in London and the South East where the changes will have the greatest impact.

The new provision for live in carers takes effect on the 1st April 2011.

Further changes are in the pipeline. From 2013 those in receipt of job seekers allowance for more than 12 months will suffer a 10% reduction in LHA. LHA is going to be uprated in accordance with the consumer prices index. We do not yet have details of this proposal which requires primary legislation.