Welfare Reform - What are the benefit changes?

1) Under Occupation (Bedroom Tax)

From April 2013, if you are living in a council or housing association home and you have a ‘spare’ bedroom you could lose some of your housing benefit. These changes only apply to working age people (18 years to pension credit age). It will affect you even if you only get a small amount of housing benefit – for example, if you are working.

What is a ‘spare’ bedroom?
Under the new rules housing benefit will cover one bedroom being allowed for:

  • Each adult couple
  • Any other person aged 16 or over
  • Two children of the same sex under the age of 16
  • Two children regardless of sex under the age of 10
  • Any other child
  • A non-resident overnight carer providing care to the claimant or their partner.

There are no exceptions to this. It does not matter how the ‘spare’ bedroom is actually used. If it is decided you have more bedrooms than the rules say you need, you will lose part of your housing benefit.

How much will be cut?
If you have one spare bedroom your housing benefit will be cut by 14% of the rent you pay every week. If you have two or more spare bedrooms, you will lose 25%.

The reduction will be a fixed amount regardless of how much housing benefit you receive. This will mean that some people will no longer be entitled to housing benefit.

An example
Mr and Mrs Smith live in a two-bedroom flat costing £70 per week in rent. At the moment they receive full housing benefit that covers the cost of all of their rent. The new rules mean that from April 2013 their housing benefit will be reduced by 14% of their rent.

14% of £70 = £9.80

Their housing benefit will be reduced to £60.20 per week. They will have to pay £9.80 per week towards their rent.

What should I do?
If you are worried about being able to afford to pay your rent  you could think about transferring to a smaller home. You can do this by bidding for a smaller home through Devon Home Choice by visiting www.devonhomechoice.co.uk

You may be able to take in a lodger. There is an application form that you will need to fill in and this can be found on the right handside of this page. Alternatively you can find paid work to increase your income.

You can apply to Teignbridge District Council (TDC) for extra financial help to pay your rent. This is called a discretionary housing payment and TDC decides who gets this payment. The number of people receiving this support is expected to be quite small. TDC may give priority to people who find it difficult to move because of family reasons or because the house has been adapted to meet the needs of a disabled person. Contact TDC’s housing department on 01626 361101 or e-mail: housing@teignbridge.gov.uk for more information.

2) Universal Credit

Universal Credit is a new benefit being introduced to replace a range of benefits and Tax Credits. The aim of Universal Credit is to simplify the system and make work pay.

Universal Credit brings together six benefits and Tax Credits and replaces them with a single monthly payment. It is replacing the following:

  • Income-based Jobseeker's Allowance
  • Income-related Employment and Support Allowance
  • Income Support
  • Working Tax Credit
  • Child Tax Credit
  • Housing Benefit

For more information please go to the Universal Credit page (click on the link on the left-hand side)

3) Benefit Cap

The Welfare Reform and Work Act (2016) introduces some changes to the benefit cap. These changes, which will take effect in autumn 2016, include changes to the benefit cap levels to £23,000 a year for couples with or without children and lone parents and £15,410 for single people without children in Greater London, and £20,000 and £13,400 respectively for those groups elsewhere in Great Britain. They also include additional exemptions for recipients of Guardian’s Allowance, Carer’s Allowance and Universal Credit claimants who receive payments towards carer’s costs.

If you are affected by the Benefit Cap, and are on Housing Benefit*, your housing benefit award will be cut - for some people to as little as 50p a week. Your other benefits cannot be cut. This means that if you are affected you must pay the shortfall between your rent and your Housing Benefit.  * NOTE: Different rules for Universal Credit

For more information about the benefit cap changes please visit www.Gov.UK/benefit-cap

4) Personal Independence Payment (PIP)

PIP helps towards some of the extra costs arising from a long term ill-health condition or disability and is based on how a person’s condition affects them, not the condition they have. It is not means-tested or subject to tax and it is payable to people who are both in and out of work, so does not depend on you having paid National Insurance Contributions.

If you are aged between 16 and 64 and have an illness that requires you to have help with care and mobility needs you may qualify.

You must have had the condition for at least three months and it must be expected to continue for at least a further nine months. It is not affected by your earnings or other income or by any savings you have. You can receive it whether you're employed or unemployed. It is almost always paid in full on top of any other benefits or tax credits that you receive. PIP is for you, not for a carer. You can qualify for PIP whether or not you have someone helping you. What matters is the effect your disability or health condition has on you and the help you need, not whether you actually get that help.  PIP can act as a ‘passport’ for other types of help, for example the Motability Scheme or Blue Badge.

If you need further information please contact the rents team on 01626 322780 or the Citizens Advice.

If you are diagnosed with a terminal illness and are between 16 and 64, please contact us on the number above immediately, as special rules may apply to enable you to claim more easily.

Please visit www.gov.uk/pip for more information.

4) Local Housing Allowance Cap

If you are in receipt of Housing Benefit or Universal Credit what you get may change in the future. As from 1st April 2018, the way Housing Benefit/Universal Credit is calculated will be changing.

What does this mean for you?

If you have signed a new tenancy or renewed an existing tenancy from 1st April 2016 onwards, the amount of Housing Benefit/Universal Credit that you may receive from April 2018 could be restricted.

This is because if you rent from a local authority, a registered housing association or other registered social landlord the amount of Housing Benefit/Universal Credit you will receive will be capped to the relevant Local Housing Allowance rate for your household size that currently applies to private sector tenants. 

If you are under 35 years old and do not have any dependent children living with you, your eligible rent will be capped to a shared accommodation rate even if you do not share your home with anyone else. 

Will I also have to pay for any spare rooms?

If you are of working age and have one or more extra bedrooms, your rent and any service charges used in the assessment of your Housing Benefit/Universal Credit is already capped.

If the difference between your rent and the relevant Local Housing Allowance rate for your household is higher than the reduction for under-occupied bedrooms, only the cap will apply.  Similarly, if the reduction for under-occupied bedrooms is higher than the relevant Local Housing Allowance rate for your household, only the reduction for under-occupied bedrooms will apply.

If you are of pension age, you will not receive a reduction in the rent used to assess your Housing Benefit for any under-occupied bedrooms but your rent will be capped to the relevant Local Housing allowance rate for your household.

Please note – in all cases. You will only receive one reduction.