Social tenants hit hard as Budget reduces benefit cap

Ruth Cooke, chief executive of Birmingham-based Midland Heart housing association, said social landlords would have to consider lowering their rents in response to the measure, which was confirmed by George Osborne today.

In his Budget statement, the chancellor announced that the cap on overall benefits would be reduced from £26,000 to £20,000 outside the capital from 2016/17. London residents will be hit by a £23,000 cap.

Housing benefit is the first payment cut if a household is affected by the benefit cap.

Analysis by blogger Joe Halewood shows that couples with three children affected by the £20,000 cap will be entitled to housing benefit of just £66 a week. A couple with four children will not be entitled to any housing benefit at all.

Government statistics show that the average weekly rent of a housing association property is £92.30.

Initial modelling by Durham-based Coast and Country shows that 750 of its households will be hit by the £20,000 benefit cap, with losses averaging £1,200 a year.

South Yorkshire Housing Association (SYHA) says the cap will potentially affect 254 households and that tenants will face a £60 shortfall a week on average.

Ms Cooke said housing associations would have to ask themselves whether ‘there is a different way to set rents’. She suggested the ‘living rent’ model – in which rents are based on local wages – would be something the sector would ‘look at closely’.

Iain Sim, chief executive of Coast and Country, said: ‘It’s the cumulative effect of the welfare cuts and clearly you could be hitting the same families multiple times. You’re looking at multiple loss of income.’

In separate analysis, SYHA has estimated that a couple with three children would be left with just £51 housing benefit a week under the £20,000 cap.

SHYA’s analysis of the £20,000 benefit cap