Housing benefit cut for low-wage renters in Rishi Sunak’s Spending Review small print

CHANCELLOR Rishi Sunak has cut the amount of money available for low-wage tenants to help pay rent.

The announcement to slash housing benefits by hundreds of millions of pounds a year was slipped into the small print of government’s official Spending Review.

Local Housing Allowance will be frozen from next yearCredit: Getty

The move comes despite Mr Sunak raising the rate just a few months ago to help renters through the coronavirus pandemic alongside eviction bans.

Currently, under a formula called Local Housing Allowance (LHA), private renters are given support to pay for the cheapest 30% of properties in their area.

This rate was newly set in April to help tenants whose incomes had been affected by the pandemic.

But this will be frozen in cash terms from next year, meaning the percentage of homes that renters can afford will fall back below 30% over time.

It means the value of properties that low-wage renters can pay for will get slimmer and slimmer as the years go on.

The report predicts that the current £1 billion cost of the measure will decline to just £345 million by 2025-26.

The Office for Budget Responsibilty, the Government’s financial watchdog, experts, confirmed the plans in a report published alongside the Spending Review.

How to check if you’re getting the right benefits

HERE we outline how to check you’re getting the right benefits and what the options are.

Citizens Advice: You can talk to a Citizens Advice adviser about what benefits might be best for you
Benefits calculator: Depending on your situation, you can also use Turn2us, Entitledto and Policy in Practice
What you’ll need: To check which benefits you can get, you’ll need information about savings, income, pension, childcare payments and any existing benefits.

What benefits are available?

Universal Credit:

The six main means-tested benefits have now been merged with Universal Credit. These are:

Working tax credit

Child tax credit
Housing benefit
Emplyment and support allowance
Jobseeker’s Allowance
Income support.

Families:

Family benefits
Child benefit
Child tax credits
Guardian’s allowance
Statutory maternity/paternity/adoption pay
Marriage allowance
Maternity grant
Maternity allowance
Widowed parent’s allowance.

Able to work:

Working tax credit
Contribution-based jobseeker’s allowance (JSA).

Low income:

Income support
Income-based jobseeker’s allowance
Income-based employment and support allowance
Pension credit
Housing benefit
Council tax reduction
Free school meals, milk or uniforms and healthcare
Support for mortgage interest
Budgeting loans and advances
Funeral payment
Local council support schemes
Cold weather payments.

Health and disabilities:

Attendance allowance
Personal independence payment
Carer’s allowance
Contribution-based employment support allowance
Statutory sick pay
State pension
Bereavement allowance
Bereavement payment
Winter fuel payments

In it, experts revealed they had assumed LHA rates would rise with inflation every year.

But they said the Government, “has now decided that rates will be frozen in cash terms from 2021-22 onwards.

“This means the £1 billion cost of the measure in 2020-21 declines to £0.3 billion by 2025-26 (and that LHA rates will fall back below the 30th percentile of local rents over time).”

The move will come as “a kick in the teeth” to both renters and landlords struggling with the consequence of coronavirus, the National Residents Landlords Association (NRLA) warned.

Ben Beadle, chief executive of the NRLA, said: “Many renters and landlords are struggling with the consequence of rent arrears through no fault of their own yet the Government is failing to take the action needed to address this.

“Whilst the Chancellor has spoken about the need to support those who find themselves homeless, it would be much better for all concerned to provide the funds needed to sustain tenancies in the first place.”

Meanwhile, the Institute for Fiscal Studies Think Tank warned the decision was “decidedly odd”.

In a statement, it said: “The support that low income renters get to help with housing will be related not to the current level of rents in their area, but to rents in 2019. That will look decidedly odd in, say, 2025.

“A similar policy over the past eight years resulted in those in some high rent areas getting less support than those in some low rent ones.

“It is entirely coherent to decide that the state should reduce its support for low income renters, but doing it in this fashion is arbitrary and unfair, and its consequences will only become more bizarre over time.”

All you need to know from the Chancellor’s Spending Review

This post first appeared on thesun.co.uk