The Queen’s speech and the benefit cap

Houses of Parliament

If you saw the Queen’s speech at the state opening of Parliament on the news last week, you will know that the government is currently working reducing the maximum amount of benefits someone can receive (the benefit cap), from £26,000 to £23,000 per year. You can find the full speech and the official government commentary on it at gov.uk/queens’s speech

We don’t as yet have a date for the change, or any of the supporting detail. We should know more after the emergency budget due on July the 8th. It’s really important though that landlords are aware of how this might affect their tenants and keep an eye open for more information as it emerges.

How the cap works.

The cap is the maximum income that a household can receive in benefits. If, when you add together the different benefits they receive, their income comes out above the maximum, a reduction is made from their Housing Benefit. The cap is currently set at

  • £500 a week for couples (with or without children living with them)
  • £500 a week for single parents whose children live with them
  • £350 a week for single adults who don’t have children, or whose children don’t live with them

As always with benefit rules, there are exceptions and qualifications, for example some benefits are not included in the calculation and some claimants can be excluded altogether. Full details about how it works and a useful calculator tool, are available on gov.uk/benefit cap

The two factors most likely to put a household’s benefit income above the cap level are having a large family, so a substantial amount of tax credits are paid and more importantly, having a high rent. Anyone affected by the cap, loses money by having the excess deducted directly from their Housing Benefit, leaving them responsible to pay any shortfall this might create on their rent from of their other benefit income.

So far, the cap has mainly had an impact on London and the South East where rents are higher. Relatively few households in Sandwell or the West Midlands have been affected. But the new lower cap might change this. How many people there are with a benefit income under the old figure of £26,000 but above of the new one of £23,000 is something I simply don’t know. And much as I would like to, it would be unprofessional to guess, so we’ll just have to wait for some official figures. But it could include one of your tenants.

Please look out for future blog posts on this subject.

Oliver

 

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