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Housing Benefit (HB) Cuts: What does it mean for Private Landlords?

Housing Benefit (HB) Cuts: What does it mean for Private Landlords?. Bromsgrove & Redditch Landlords ’ Meeting March 2011. The LHA changes. Background to the cuts. NEW Coalition Government focus on cost savings

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Housing Benefit (HB) Cuts: What does it mean for Private Landlords?

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  1. Housing Benefit (HB) Cuts: What does it mean for Private Landlords? Bromsgrove & Redditch Landlords’ Meeting March 2011

  2. The LHA changes

  3. Background to the cuts NEW Coalition Government focus on cost savings Emergency budget 22 June 2010 announced £11 billion of cuts from the welfare budget HB cuts amount to £1.8 billion of these cuts Spending Review 20 Oct added a further £7 billion of cuts to welfare budget Important to be realistic about impact

  4. What are the HB cuts? CUT 1: Local Housing Allowance (LHA) Caps When: From 1st Apr 2011 LHA rates will be subject to the following caps: 1 bed: £250.00 per week/£1083.33 per month 2 bed: £290.00 per week/£1256.67 per month 3 bed: £340.00 per week/£1473.33 per month 4 bed: £400.00 per week/£1733.33 per month

  5. What are the HB cuts? Current Bromsgrove & Redditch LHA rates (March): (Birmingham/ Black Country/ Solihull BRMAs) 1 bed: Bir £103, BC £91, Sol £115 per wk (cap £250) 2 bed: Bir £126, BC £109, Sol £150 per wk (cap £290) 3 bed: Bir £137, BC £126, Sol £173 per wk (cap £340) 4 bed: Bir £184, BC £160, Sol £276 per wk (cap £400) RESULT: NO DIRECT EFFECT DUE TO THIS CUT ON ANY OF THE BRMAs IN BROMSGROVE

  6. What are the HB cuts? Current Bromsgrove & Redditch LHA rates (March): (North Worcester/ South Worcester BRMAs) 1 bed: NWor £98, SWor £103 per wk (cap £250) 2 bed: NWor £120, SWor £131 per wk (cap £290) 3 bed: NWor £135, SWor £155 per wk (cap £340) 4 bed: NWor £190, SWor £296 per wk (cap £400) RESULT: NO DIRECT EFFECT DUE TO THIS CUT ON ANY OF THE BRMAs IN REDDITCH

  7. What are the HB cuts? CUT 2: Removal of £15 weekly excess When: From 1st Apr 2011 Prior to 1st April where their rent is less than their LHA entitlement, then a tenant was eligible to receive upto £15 a week paid to them Announced by previous Gov’t, implementation was deferred until April 2011

  8. What are the HB cuts? CUT 3: LHA to be set at the 30th percentile When: was from October 2011 (now changed to 1st April 2011) At the moment LHA rates are set at the 50th percentile (median) So, what does this mean? In simple terms?

  9. What are the HB cuts? LHA rates are set according to the list of evidenced rents they hold according to property size for an area, from lowest rent to highest rent, so simply……..

  10. What are the HB cuts?

  11. Current 50th & 30th percentile rates

  12. Current 50th & 30th percentile rates

  13. What are the HB cuts? CUT 4: Non-dependent deductions (NDDs) When: From April 2011-2014 A non dependent is someone who normally lives with the HB claimant such as an adult son or daughter. NDDs are the deductions made to a household’s HB when it contains a non dependent. There will be staged increases in NDDs to bring them up to a level they would have been had they been uprated since 2001

  14. Give me the good news… • Transitional Arrangements • 9 months + for existing tenancies • 9 months starts from date of anniversary HB claim • Exception is the £15 excess • Additional Bedroom for non-resident carer • Increased DHP funding • Changes to Direct Payment Provisions • Increased use of PRS likely in 2011 (Localism Bill)

  15. National DHP Budget to rise When From: April 2011 How much? Extra £10 million in 2011/2012 Extra £40 million from 2012/2013 onwards Making a DHP budget of £60 million a year from April 2012 Also a targeted extra £50 million over period April 2011 – March 2015 Extra funds are relatively insignificant in comparison to the cuts (£1.8 billion)

  16. Changes to Direct Payment Provisions • When From: 1st April 2011 Default position is still for HB to be paid to tenant Safeguards for Landlords still apply (both mandatory and discretionary) • New expanded discretion to make payment direct to Landlord where LA considers that it will assist the tenant in securing or retaining a tenancy (evidence of reducing and sustainable rents required)

  17. What are the future HB cuts? • CUT 5: Change to the eligibility criteria for the 1 bed room allowance When: From April 2012 • Shared Room Rate allowance only • Age limit extended to 35 years old and under • Affordability of 1 bed properties • Rise in the HMO / Shared Accommodation • Tenancy Relations issues

  18. What are the future HB cuts? CUT 6: HB award reduced to 90% for claimants of Job Seekers Allowance (JSA) When: Now Cancelled!! Any claimant on JSA for more than 12 months will have their HB entitlement cut by 10% until they have ‘left the benefit system’ & been in work for a while

  19. What are the future HB cuts? CUT 7: Index linking of LHA When: From 2013/14 needs primary legislation LHA rates will be uprated on the basis of the Consumer Price Index (CPI) Concerns: Rents generally rise faster than the CPI and no more link to ‘Housing market’

  20. Universal Credit Universal Credit introduced over next 10 years Combines all out of work income related benefits (inc. HB) with tax credits Claims to start in 2013 and be completed by 2017 Capped at 50% of median income What will become of HB Depts? Direct Payments to go?

  21. How to prepare for the changes to LHA

  22. What preparations should be made before the HB cuts are introduced? What size properties do you currently let to households in receipt of HB and in what BRMA? What type of households? Do you let to anyone in receipt of JSA? Ages of 1 bed single households? Should you lower your rents? Should you make improvements in the way you manage your HB tenancies? DHP fund to increase – can this be used if you are working in partnership with the Council?

  23. What could the Council do to help? • Do you have any suggestions of things that the Council could do to alleviate concerns you may have over the upcoming LHA changes? • Changes to direct payment provisions, how can you work with the LA to assist them in sustaining tenancies

  24. Dealing with rent arrears effectively • Households in receipt of Housing Benefit are often on very low incomes & by just falling a small amount in arrears can be a challenge to pay back • Keep an up to date rental account • Contact the tenant to find out why the rent is late • Follow the telephone call with a letter so that you have a record(mindful of harassment) • Try & be sympathetic, you want to create an environment in which your tenant keeps you informed (text?)

  25. Dealing with rent arrears effectively Try to reach an agreement with them for paying off the rent arrears, either lump sum or weekly/monthly extra amounts Consider lowering the rent temporarily if they are experiencing difficult circumstances Keep a close check on whether repayments are being made Contact the Council if there are problems with the Housing Benefit claim or for further advice If you are working with the Councils Rent Bond Scheme, can you use their advice or contact line?

  26. Options for Landlords Serve notice on all HB tenants! Realistic Impact Assessment Work with your tenant to discuss affordability around the new changes Work in partnership with the Council because of the additional benefits that can be provided around tenancy sustainment and perhaps direct payments / use of DHP

  27. Contact Details Inside Housing Solutions Ltd South Barn, Cowix Farm Capel Road Rusper West Sussex RH12 4PY (01293) 871107 info@insidehousingsolutions.com mike@insidehousingsolutions.com

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