WIDER POLICIES
UK Housing Benefit Policy

Key policies:

Single Room Rent Restriction
Non-dependent deductions
16-hour rule
Benefit extensions
Payment in arrears
Local Housing Allowance

Housing Benefit helps low income households in either social or private rented accommodation to pay their rent. The amount of Housing Benefit that a household receives depends on its income, savings, circumstances (e.g. age and size of family) and the amount of rent being paid. The maximum Housing Benefit that a household can receive may be less than, but is never greater than, the actual rent.

There are two particular circumstances where the amount of Housing Benefit is reduced:

If the claimant is a single person aged under 25, the maximum amount of Housing Benefit is limited to the average rent for a single room in the area. This is called the Single Room Rent Restriction.
If the child of a benefit claimant who lives with that claimant is aged 18 or over. This is called 'non-dependent deductions'.

The Government set out its plans for Housing Benefit reform in a January 2006 Green Paper entitled A New Deal for Welfare: Empowering People to Work. These centre on the replacement of Housing Benefit in the private rented sector (but not yet the social rented sector) with something called the Local Housing Allowance (LHA). With the LHA, the amount of benefit will be a flat rate allowance based on the number of occupiers and location rather than on the amount of rent that the claimant is actually paying. Claimants will be able to keep any surplus between the LHA and their actual rent, or have to make up any shortfall, the idea being that the claimant is encouraged to shop around for suitable accommodation given their circumstances^[1] Another significant change is that the LHA will be paid direct to claimants, removing the choice available to claimants under current rules to have their benefit paid direct to landlords. Broadly speaking, however, the rules and regulations will be the same as for Housing Benefit and so, for example, the Single Room Rent Restriction will continue, though with a slightly more generous definition.^[2]

There are many rules and regulations surrounding Housing Benefit. Those which are of particular concern from a homelessness perspective are discussed below.

The Single Room Rent Restriction (SRR)

A Joseph Rowntree Foundation report Reforming Housing Benefit for private tenants and tax credit recipients has estimated that, on average, private sector tenants in receipt of Housing Benefit currently face a shortfall of around £20 per week between their benefit entitlement and their rent.^[3] Research suggests that, as well as causing financial difficulties for those in receipt of Housing Benefit, the shortfalls also reduce the supply of accommodation available for them as they make landlords more reluctant to let to Housing Benefit clamants.^[4]

For single people under the age of 25, these potential problems are exacerbated because the maximum amount of Housing Benefit that they are entitled to under the Single Room Rent restriction is restricted to the average cost of renting a room in a shared flat.

After the Single Room Rent restriction was introduced in 1996, the number of young people in deregulated private rented accommodation fell by three-quarters, from 114,000 in 1996 to 31,000 in 2000.^[5]

Research carried out by the Department of Work and Pensions in 2005 into the effects of the Single Room Rent restriction confirmed these negative impacts^[6], but the January 2006 DWP Welfare Reform Green Paper A New Deal for Welfare: Empowering people to work did not contain any proposals to abolish or reform it.

Non-dependent deductions

The non-dependent deduction is a measure whereby when an occupant or family member reaches 18, a deduction is made from the total HB received by the family unit. This financial penalty of the non-dependent deduction has been known to force young people to leave home, which in turn can directly cause homelessness and/or lead to another claim for Housing Benefit, which more than wipes out the savings resulting from the non-dependent deduction.^[7]

Non-dependent deductions are set at a flat rate for any non-dependents who are not working, or working less than 16 hours per week. However, for those working over 16 hours, a sliding scale is introduced for the level of reduction, based on the non-dependent's earnings. In some cases, the level of reduction may be high enough to act as disincentive to work^[8]. The policy is also associated with Housing Benefit administration problems, which can lead to arrears and potential eviction.

Benefit extensions

Until recently, Housing Benefit ceased as soon as a claimant started work. This can obviously act as a disincentive to seeking work, as the claimant may feel that taking on a job is too risky for their short-term finances. To increase certainty, the Government has recently introduced a new four week benefit run-on, but only for claimants who have been in receipt of Income Support or JobSeeker's Allowance for at least 6 months and only if the job lasts for five weeks or more. The six month rule means that these benefit extensions will exclude those moving in and out of work, those making a few failed attempts before finding a suitable job, and those that simply have not been consistently claiming for 6 months - a substantial proportion of job seekers.^[9] The five week rule deters those from trying out jobs when they are unsure how they will work out, or from trying paid work experience for or a couple of weeks.^[10] Both of these rules seem likely to act as a disincentive for homeless people to find work.

Payment in arrears

Payment of Housing Benefit is always at least four weeks in arrears. In practice, payments are often further delayed at the start of a claim because of delays in processing the application; for example, around a fifth of claims are not processed within 14 days.^[11] Local authorities are also not required to stipulate when the first payment will be made. The potential impact on homeless people is to make it more difficult for them to find accommodation, partly because of the financial difficulties of surviving the period until the Housing Benefit arrives, and partly because of a reduction in the supply of available accommodation as payment in arrears acts as a disincentive for landlords to rent to them.

The 16-hour rule

The 16-hour rule means that anyone over the age of 18 cannot claim Housing Benefit if they are studying for more than 16 hours a week. In practice, this means that many low skilled homeless people are likely to be abandoning attempts to gain qualifications at Level 2 and 3, and instead move into work that does not require qualifications or skills. For example, research amongst young homeless people conducted by The Foyer Federation 'The 16-hour rule - past its sell by date?' estimates that over half of its residents have no qualifications and that around two-fifths of these people are deterred from studying because they would lose their benefit entitlement.^[12]

End notes

[1] See the DWP publication Building Choice and responsibility: a radical agenda for housing benefit 2002 for more details Back to text

[2] Albeit with a slightly more generous allowance for the under 25s. The basic difference is that the ‘Single Room Rent' Restriction is based on single room with shared kitchen and bathroom etc whereas the Local Housing Allowance will be based on an average single room, which may or may not have a shared bathroom and kitchen. Back to text

[3] Reforming housing benefit for private tenants and tax credit recipients, Kemp and Wilcox, Joseph Rowntree Foundation, 2002. Back to text

[4] ‘Private renting: a new settlement', Shelter and Joseph Rowntree Foundation, 2002 states that: "housing benefit significantly undercuts rent levels, and as a result many landlords have withdrawn from the claimant market altogether. The result is to exclude households on housing benefit from reasonable accommodation in the sector, especially in areas of high demand for housing". Back to text

[5] Reforming housing benefit for private tenants and tax credit recipients, Kemp and Wilcox, Joseph Rowntree Foundation, 2002. Back to text

[6] DWP: Research into the Single Room Rent regulations, June 2005 Back to text

[7]Chartered Institute of Housing: Evidence to the Social Security Commission Inquiry on Housing Benefit Reform, February 2000. Back to text

[8] Chartered Institute of Housing: Evidence to the Social Security Commission Inquiry on Housing Benefit Reform, February 2000. Back to text

[9] The Pivot Initiative, 2001. Back to text

[10] The Pivot Initiative, 2001. Back to text

[11] DWP Housing Benefit statistics for 2004/05. Back to text

[12] The 16 hour rule - past its sell by date, Foyer Federation, 2003. Back to text

Page last modified on 21/06/2006 at 12:30