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HB for social tenants to be capped at LHA rates
Housing benefit for social housing tenants will be capped in line with the private sector to stop social landlords charging “inflated rent”, George Osborne has announced.
The policy, which was announced by the chancellor today in the Spending Review, will limit housing benefit for social renters taking up new tenancies to Local Housing Allowance rates.
It is expected to save £225m each year by 2020/21, according to the Spending Review and Autumn Statement document.
The move means that housing benefit for single people in social housing under 35 without children will be restricted to shared accommodation rates. This means they will only be able to claim the same amount of benefit as a private tenant is able to claim for a room in a shared house.
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In the Spending Review document, the government says the change is designed to “prevent social landlords from charging inflated rent for their properties”.
The policy will apply to tenancies signed after 1 April 2016, with the entitlement changing from 1 April 2018.
Local Housing Allowance (LHA) in the private sector was brought in 2008 by the Labour government to decouple rising private rents from housing benefit.
Under the coalition government in 2011, LHA rates were set in line with the 30th percentile of local market rents.
The move is expected to have a larger impact on specially adapted properties, which traditionally command higher rents. The government has not said whether there will be exemptions for particular properties.
In his speech, Mr Osborne said he would apply no further changes to universal credit or work allowances, beyond those already passed in Parliament.
He also said he would stop paying housing benefit and pension credit payments to people who have left the country for more than a month.
The government will also devolve the £10m temporary accommodation management fee budget to councils and give extra Discretionary Housing Payment funding to local authorities to protected those in supported accommodation.
The Spending Review document says ministers will consider transferring responsibility for funding the administration of housing benefit for pensioners to councils.
