BBC News - Housing benefit: How does it work?

28 October 2010 Last updated at 13:57

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Housing benefit: How does it work?

Quite a lot of paperwork is involved in claiming housing benefit

Politicians are debating the future of UK housing benefit, with many thousands of people potentially affected by any changes.

The rules will be set by government, but the benefit itself is administered by local councils.

So who is eligible and how does the benefit work?

And if a cap is introduced who would be hit?

Who is housing benefit aimed at?

Benefits and Tax Credits

• How to avoid losing child benefit
• Tax credit repayments 'to soar'
• The changes to your tax credits
• Is £14,400 really enough to live on?

Those who struggle to pay their rent because they have a low income are the target of housing benefit.

It does not matter if these people are earning a wage or not, but their income and their savings are relevant.

People can get help for many different types of accommodation, such as furnished or unfurnished flats, bedsits, rented houses or hostels or lodgings, as long as they pay rent to a landlord or landlady.

But they cannot get the benefit to buy a home, for mortgage payments, or for day-to-day living expenses.

Some service costs are covered by the benefit, but water and heating bills are not.

How do I know if I am eligible and how is it calculated?

This is quite complicated but there is help available from local councils.

Generally, those with total incomes below £16,000 a year can claim.

The amount they receive depends on various factors.

So, local authorities will calculate so-called eligible rent by considering income, age, the size of family and disabilities of people living in a council property. This means people must keep the council up to date with any change of circumstances.

Those who live in private accommodation have their benefit calculated through what is known as the Local Housing Allowance, which takes into account local rent levels every month. Exactly half of homes will have rent levels below the Local Housing Allowance rate and so could be paid for in full with housing benefit.

If the rent is lower than the Local Housing Allowance rate, then recipients can keep any excess benefit up to a maximum of £15 per week. If the rent is higher than the Local Housing Allowance rate, tenants will need to pay the difference.

Housing benefit is often connected with other benefits - many claim together with benefits such as Income Support - and it depends on income, as well as levels of savings and investments. For those not on other benefits, they can fill in a claim form.

An online benefits calculator can help estimate how much a claimant might be due.

Perhaps it is easier to say who does not get it?

Indeed. Those who have savings of more than £16,000 are not eligible.

Most full-time students, those who live in the home of a close relative, and asylum seekers are also blocked from the benefit.

Only one of a couple living together can claim. And single people aged under 25 can only get the benefit for a bedsit or a room in shared accommodation, although this is set to change to people aged under 35.

How is it paid?

Council tenants will have it paid straight into their rent accounts.

Private tenants will usually be paid by cheque or by direct debit into a bank or building society account.

Claims can be submitted 13 weeks before moving in, or 17 weeks for those aged 60 and over. Sometimes it can be backdated.

What are the proposals that have caused a political rumpus?

PROPOSED HOUSING BENEFIT CAP

• £250 for a one-bedroom property
• £290 for a two-bedroom property
• £340 for a three-bedroom property
• £400 for a four-bedroom property

• Poor 'not cleansed' from London
• Housing benefit: Who loses out?
• Commentators debate cap

The coalition government wants to put a cap on housing benefit, ranging from £250 a week for those in a one-bedroom property to £400 for those in a four-bedroom property.

Some 775,000 claimants could be affected by changes to the way local housing benefit levels are calculated.

At the moment, the Local Housing Allowance is based on the median average rent for an area, so half of private rents cost less and half cost more than housing benefit levels.

From next year it will be based on the 30th percentile of local rented accommodation, so only 30% of all rented property on the market will cost less and 70% will cost more than housing benefit payments. The government says this will drive down housing costs. Claimants would lose an average of £9 a week.

There are also plans for a 10% cut in housing benefit for anyone on jobseeker's allowance for more than a year.

Labour says thousands of people will be forced out of their homes.

London Mayor Boris Johnson is also concerned that the higher living costs of London will lead to residents of the capital being severely affected.

The Department of Communities and Local Government is to grant £10m from its homelessness budget to local councils' funds to ease the consequences of the change, in addition to £60m already allocated for a similar purpose.

via bbc.co.uk