The biggest shake-up of housing benefit since the system was introduced 20 years ago has begun.
On Monday, Blackpool council became the first of nine local authorities to pay a flat rate of housing benefit directly to private sector tenants. Those whose rent is lower than their benefit will get to keep the difference.

Blackpool council will initially roll out the scheme to its 7000 new housing benefit applicants and will gradually transfer existing recipients.

First announced in October 2002, the pilot will run for two years in Blackpool and eight other local authorities: Coventry, Leeds, Edinburgh, Teignbridge, Conwy, Lewisham, Brighton & Hove and North-east Lincolnshire.

It is also likely that the scheme will be piloted in the social sector before rent restructuring is complete in 2010 in areas where rents have already converged.

Under current rules, benefit goes straight to the landlord. Lenders and landlords fear payment to tenants could increase arrears as poor households are torn between paying rent and buying essential items. They also fear ghettos will be created as tenants move to cheaper homes in a bid to save cash. Middlesbrough pulled out of the pilot as it feared the changes could skew the results of its market renewal work.

But housing benefit minister Chris Pond said the project would smooth the path back into employment for claimants because they would know exactly how much benefit they would receive.

Source

Housing Today