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The Chartered Institute of Housing is the independent voice for housing and the home of professional standards

The lower overall benefit cap: what do we need to know?


Last week the government confirmed that the new, lower overall benefit cap will be introduced from 7 November. It will see the total value of certain benefits that a working age household can receive reduced from £26,000 per year to £20,000 (or £23,000 in London). But what will this change mean? CIH policy and practice officer David Pipe explains.

Front doorsThe new change will be significant as it will substantially increase the number of households affected. Government figures show that between April 2013 and November 2015, almost 70,000 households had their housing benefit reduced at some time as a result of the existing cap. However most of these were larger families living in relatively high cost parts of the country.

Unsurprisingly the cap had the greatest impact in London, with 45 per cent of all those affected living in the capital. Many of those affected were also living in the private rented sector, where rents are typically highest. This is shortly all going to change though and social landlords based elsewhere in the country, who to date may have had very little experience of working with households whose benefits have been capped, will begin to see it having an impact in their area.

What we think

Government estimates that initially a total of 115,000 households will see their housing benefit, or universal credit, reduced. Although this is still substantially fewer than were affected by, for example, the bedroom tax, we think that the lower cap will affect an average family with three or more children across much of the country – even if they are only paying a social rent. In some areas it will affect even smaller families.

The amounts that these households stand to lose will also, in some cases, be very substantial. The impact will be greatest on those who are already affected by the current £26,000 cap, as they will feel the effects of the reduction in its entirety. In London these families will see their income reduced by a further £57 per week, and outside the capital they will lose around £115 per week.

How to prepare

It’s vital that landlords are prepared for this change, even if they have not had much experience of the cap in the past. It’s likely that those affected will need considerable support, whether it’s help applying for discretionary housing payments, or support to help them to move into employment or on to cheaper accommodation. At CIH we’ll be looking to share good practice gathered from those who have experience of this, and we’ll also be looking to highlight the impact of the reduced cap to government.

In the meantime and to start this work off, we’ve published a new briefing exclusively for CIH members and we will be holding a webinar on 13 October. Both provide a quick and simple summary of the most important information about the benefit cap – who it applies to and who is exempt, which benefits are included and who is likely to be affected.

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