Landlords and the Benefit Cap

£5 Note (2)

We don’t know exactly when it’s coming to Sandwell, but the government’s proposed legislation to cut the maximum in benefits most people can receive from £26,000 a year to £20,000 (£23,000 in London) had its second reading in parliament this week.

Landlords should be aware that although it’s some way off, it is coming and it is applied by making a deduction from the tenant’s Housing Benefit. Meaning the tenant has to make up any shortfall in rent from their other benefit income. Landlords should be starting to think about whether it will affect how they collect their rents, especially once Universal Credit kicks in.

We can’t yet say how many or which Sandwell households will come in above the new cap. (It certainly won’t be everyone). There is an online calculator on gov.uk which lets someone work out if they would be affected by the current cap, but as this is still set on the £26,000 rate, it wont yet help with the new figure. One very crude rule is that the more children you have, the more likely you are to be affected and the greater the amount of your deduction, as you probably receive more tax credits and have higher Housing Benefit due to larger accommodation.

The current rules are on gov.uk including which benefits are used to work out the cap or are disregard and who is excluded. This can give people at least some idea of what the change might mean for them, even if only on the basis of a rough estimate, rather than a detailed assessment.

As soon as we can though, we’ll post more information on the blog.

Oliver

 

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