Housing announcements in 2015 budget

The Chancellor of the Exchequer gave his budget to Parliament on Wednesday 8th July.  The full budget and supporting documents can be found on Gov.uk. We've rounded up some of the headline announcements which will impact on those who work in housing. 

Housing benefit cut for young people

From April 2017 young people who are out of work and in receipt of jobseekers allowance will no longer be automatically entitled to the housing support element of universal credit.  The government has said that there will be exemptions to this rule and that these exemptions will cater for vulnerable young people, those who may not be able to return home to live with their parents, and those who have been in work for 6 months prior to making a claim, who will continue to be able to receive housing support for up to 6 months while they look for work.   This group of young people will also have extra levels of conditionality attached to their claims for jobseekers allowance and will be expected to go into a mandatory work placement or enroll on an apprenticeship after 6 months. 

Benefit backdating restricted to 4 weeks

From April 2016 backdating of housing benefit awards will be restricted to 4 weeks.  This is a significant reduction on the current timeframe for backdating which allows for backdated payments of up to 26 weeks. 

Restricting housing benefit claims to 2 children

Housing benefit and the housing support element of universal credit will be subject to the same family size cuts that impact on tax credits.  From April 2017 awards will be limited to two children per household. This applies to UC claimants who claim for the first time after April 2017 and to children born after 6 April 2017. The family permium will also be removed from housing benefit awards for new claims and new births from April 2016. Multiple births will be protected from these cuts.   The budget documents states that the government expects the Department for Work and Pensions and HMRC to develop protections for women who have a third child "as the result of rape, or other exceptional circumstances". 

Support for Mortgage Interest

SMI, the payment which assists out of work households with the cost of mortgage interest payments on certain loans and which has recently been reduced, will be converted into a loan.  Loans will be repaid on the sale of the property or when claimants return to work.  This new system will apply from April 2018.  The waiting period for SMI is currently 13 weeks.  From April 2016 this waiting period will return to its pre-recession level of 39 weeks, meaning homeowners will need to be in receipt of qualifying benefits for 9 months before they will get any assistance with their housing costs.

Local Housing Allowance rates frozen for 4 years

LHA rates will be frozen for 4 years from April 2016 along with SSA, ESAm Income Support and Child Benefit.  The government states that provision will be made for high rent areas. 

Lowering the benefit cap

The benefit cap will be reduced to £20,000 for claimants living outside of London.  

Rent a room threshold increased

People who rent out rooms in their own home to a lodger are currently allowed a rental income of up to £4,250 before they must pay tax.  The chancellor intends to increase this threshold to £7,500 from April 2016 to reflect rent increases. 

Benefit matters for Northern Ireland

Social security legislation is devolved in Northern Ireland, but generally follows the same changes that apply in the rest of the UK.   However, we are still waiting for the Welfare Reform Bill to make its passage through the NI Assembly.  Some, but not all, of the changes announced in the budget are tied to Universal Credit which has not yet been introduced in Northern Ireland.  We will update our website and resources as we become aware of legislation to enact any of the announced changes.   Taxation is not a devolved matter so changes to tax credits will not need local legislation. 

Other housing annoucements

The Chancellor made a number of other high profile housing announcements which are likely to have significant impacts on the market in Great Britain.  These include

• a "pay to stay" policy, requiring that high earning social housing tenants pay a market rent or leave their tenancy
• a review of the use of lifetime tenancies in social housing
• a 1% rent reduction in social housing rents in England
• restricting the tax relief available to private landlords, including reducing the rate at which Mortgage Interest Relief is paid and reforming the wear and tear allowance and
• creating a help to buy ISA to assist first time buyers.