Lettings Update – Changes From April 2016

Hi
The following benefit changes are set to take place in 2016, some may be subject to change or approval.

 

Benefit and Tax Credit rates frozen

 

The main rates of working age benefits and tax credits will be frozen in cash terms for 4 years from April 2016. Pensioner benefits are excluded from the benefit freeze and will be protected by the ‘triple lock’.

 

Disability benefits, the disability-related elements of tax credits and statutory payments including Personal Independence Payment, Attendance Allowance, Disability Living Allowance, Employment and Support Allowance (Support Group only), Maternity Allowance, Statutory Maternity/Paternity Pay and Statutory Sick Pay, will be uprated in line with the Consumer Prices Index (CPI). The CPI was announced to have fallen in the year to September 2015 so this means that the benefits mentioned above will not be increased from April 2016.

 

Benefit Cap Reduced

 

There is currently a benefit cap in place restricting the amount in certain benefits that a working age household can receive. Any household receiving more than the cap has their Housing Benefit reduced to bring them back within the limit. This cap of £26,000 per year is to be reduced to £23,000 for households living in London and to £20,000 for those outside London. For further details see our Benefit Cap reduction April 2016 help page.

 

Landlords! – do you have any large families that will be squeezed further by this change? 

 

Housing Benefit changes

 

Unlike other reforms the Chancellor announced directly affecting child related payments, withdrawal of the family premium in Housing Benefit (£17.45 when a claimant has one or more dependant children) will take effect from 1 May 2016, a year earlier than the reductions for children within Child Tax Credit. Removal of the family premium will affect both new claims and new births from 1 May 2016. For further details see our Family premium abolished May 2016 help page.

 

This mainly effects how landlords vet their tenants – as it will have a massive impact when you do part time calculations for affordability; as tenants’ top ups will increase dramatically. We will have to monitor how this effects affordability because it may either lead to not being able to accept many part time workers into properties or you will have to re-adjust the acceptable top up levels by increasing them.

 

TO GIVE AN EXAMPLE – we just did a Housing Benefit calculation for a girl working 15 hours and when we remove the family premium her contribution jumps from £85.80 to £134 = £48 extra for them to pay under new rules

 

Housing Benefit backdating will be reduced so that new claims from working age claimants will be backdated for a maximum of four weeks. Currently, if you are working age, your Housing Benefit claim can be backdated for up to six months if you can show good cause for making a late claim and you would have qualified for the benefit sooner.

 

Universal Credit changes

 

The work allowance in Universal Credit, the amount you can earn without your benefit being affected, will be reduced from April 2016. For disabled people and people with children it will be reduced to £192 per month if you have housing costs and £397 per month if you don’t have housing costs. The work allowance will be abolished altogether from April 2016 for non-disabled, childless claimants meaning your benefit is reduced as soon as you start earning.

 

The Childcare Costs element of Universal Credit currently pays for 70% of your registered childcare costs up to a monthly limit of £532 for one child or £912 for two or more children. From 11 April 2016, this will increase so that you will be able to claim back up to 85% of your paid out childcare costs up to a monthly limit of £646 for one child or £1108 for two or more children.

 

Until UC rolls out beyond new / single claimants this won’t affect us.

 

Other changes

 

National Minimum Wage increased

 

The National Minimum Wage will be ‘rebranded’ as the National Living Wage and will be increased to £7.20 per hour for those 25 or over from April 2016. It will reach £9.00 per hour by 2020.

 

Take action get in contact with us: 

 

Absolutely rock solid property investment 

 

http://www.ngupropertyinvestments.co.uk/contact.php

 

email: mikebell@nguhomesalesonline.co.uk 

Or call: 0191 491 0333 and ask for Mike Bell
Investment property that will run itself letting you do the things that you enjoy.