Delays Benefit PRS

By: Madalena Penny

Speculation is surrounding reports this week that the government’s housing benefit caps will be put on hold by a further 9 months for existing claimants.

The cuts, which were due to be introduced next April and October are said to only apply to new applicants, while existing applicants will not be affected until January 2012.

Tenants in London, which would be the most affected by the cuts will now have more time to find alternative housing, which would fall within the new budget resulting from the blanket cuts.  The government’s aim to reduce the £21bn housing benefit bill by slashing the current maximum housing allowance claim from £103,000 per annum to £20,800 has come under opposition fearing it will lead to a mass exodus of low- income households being driven from the capital.

The new limits set by the government consisting of £400 per week for a 4 bed-roomed property; £340 for a 3 bed-roomed; £290 for a 2 bed-roomed and £250 for a 1 bed-roomed property would only affect new claimants as from April next year.

A spokesman for the Department of Work and Pensions said:
“This is speculation.  The truth is the housing benefit system is unfair to those who receive it and the taxpayer that funds it, and we have to put fairness back at the heart of the system.”

Further housing benefit rate changes, which were planned to be based on the lowest third of rents rather than average local rents would also be deferred from it’s introduction in October 2011 to January 2012 for existing claimants.

Senior partner, Sim Sekhon for landlord legal network, ‘Legal 4 Landlords’, said: “The proposed caps have put landlords in a difficult and problematic position.  Many cannot reduce rents due to buy-to-let mortgage commitments but do not want to evict responsible tenants.  If the caps are deferred to 2012, this would give landlords providing LHA tenancies and their tenants breathing space.  The private rented sector is currently adapting to the housing shortage and a surge in tenant-demand.  Any caps introduced at this time would hinder the growth and progress of the industry.”