Housing Benefit could Affect Poverty Threshold

Latest landlord News by: Madalena Penny.

CPAG, the Child Property Action Group has attacked housing benefit caps introduced by the welfare reform bill.  Stating that the cuts will result in thousands of families and 20,000 children being driven out of the capital once welfare legislation is applied.

Classed by the group as an exercise in social segregation, the group have launched their own legal action against the government’s introduction of the caps and have applied for a judicial review.

The reform applied to housing benefits, which will be introduced to new tenancies this April has fallen under a swathe of attack from charities, welfare groups, housing strategists and economists.  A recent study commissioned by housing charity, Shelter and the Chartered Institute of Housing, which was published this week indicated that housing would become unaffordable to a third of English households when housing benefit is calculated by CPI (Consumer Price Index) in 2013.

The study further revealed that within 17 years of CPI linked housing benefit; a whopping 60% of housing within England’s local authorities would become unaffordable to claimants in receipt of housing benefit.

The study concentrates on the impact on low-income families living in the private rented sector and receiving LHA.  Households claiming housing benefit will struggle to find decent affordable homes in areas with higher employment once the CPI rates are applied, the study indicated.  Complimentary research by Cambridge University revealed that as demand for private rented housing is high and that the sector is currently experiencing rapid growth, it is impossible to predict future rental inflation.

Concerns about the impact the changes will have on child poverty have been studied, indicating that 54% of children currently living in a private rented home survive below the poverty line, rising to 74% among housing benefit claimants.

Private landlords are advised to contact their local housing benefit office, as new tenancies will be affected by the reduction relating to the 30% percentile rule, which will be launched in April this year and January 2012 for existing claimants.  With over 1 million private rented households claiming housing benefit it is estimated that an average household will be over £600 a year worse off.

Sim Sekhon, spokesman for ‘Legal 4 Landlords’ said:  “Landlords are unclear about the affects the new percentile rule will have on their rental income and housing benefit rates.  Although a lot has been written about the subject in the newspapers, local authorities have yet to issue further information on the changes.  We suggest that landlords should contact their local authorities.”