One of the questions support workers in women’s refuges, homeless projects, hostels etc. are frequently asked is “If I go back to work, how will I afford to stay here and pay my rent?” The worry is that if you move off benefits, you won’t get any housing benefit (HB) to help with the rent.
My advice is to ask: do you get your full rent paid now when you have benefits in payment? If the answer is yes, then unless you have a high income you are likely to get some support with your rent payments once you move into employment, as the local authority’s housing benefit office has already accepted that your full rent can be paid by housing benefit. Sometimes the maximum that can be paid by housing benefit is less than the rent due, for example because you are under occupying or have ineligible service charges.
Temporary accommodation costs are traditionally very high, because in addition to the rent charge the accommodation costs may include a management charge or a charge for support. This means that although this type of accommodation typically charges a very high rent, it is still met by housing benefit. If you are a Universal Credit claimant and live in specified accommodation, you will still claim housing benefit to cover your rent.
Housing Benefit is calculated by looking at the maximum amount housing benefit will pay to your rent and your applicable amount. Your applicable amount is the amount that the government says that you and your family need to live on each week. It’s a set formula that includes things like a personal allowance and amounts because you have children or a disability or are a carer. Housing benefit can be paid in and out of work, but any income over the applicable amount reduces the amount of housing benefit paid by 65%. You don’t really need to know exactly what your applicable amount is or exactly how to work out how much HB you’ll qualify for, but I’m going to give an example to attempt to explain how it works:
Peter is 26, and living in temporary accommodation provided by the council after being granted refugee status. His rent is £200 a week (and can be met in full by housing benefit). He’s currently receiving income based JSA (73.10 a week) and so gets all of his rent paid by housing benefit. He finds a job working 25 hours a week at minimum wage earning £180, take home pay £177. To calculate how much housing benefit he’ll get, we take away his applicable amount from his weekly earnings to find his excess income (£177 - £73.10 = £103.90), but as a single person the first £5 a week of his earnings are ignored, giving us an excess income of £98.90. 65% of £98.90 is £64.28. His housing benefit award with therefore be £200 - £64.28 (65% of his excess income) = £135.72. He’ll have to pay the £64.28 shortfall himself, but overall he’ll be £39.62 a week better off if he works.
Overall, the more somebody works the better off they will be, even taking into account the fact that they may become eligible for working tax credits. For example, Peter would need to earn somewhere upwards of £26,000 a year before he stopped receiving any housing benefit at all for his current accommodation. If he moves into a permanent tenancy, with a lower rent, then his HB may reduce, but the amount Peter pays himself should remain the same (assuming there are no deductions from his maximum rent for example for under occupancy).
To sum up, if you live in temporary accommodation, Housing Benefit will pay something towards your rent whether you are in or out of work, as long as your income is not too high. The important thing is that working is not incompatible with receiving housing benefit although the financial advantages may be relatively minor if you are on a low income.
Specified accommodation is:
- accommodation provided by a relevant body to meet your need for, and where you get, care, support or supervision; or
- temporary accommodation provided by a local authority or a relevant body because you have left your home because of domestic violence – for example, a refuge.
- a local authority hostel for homeless people where you get care, support or supervision to assist you to be rehabilitated or resettled within the community; or
- 'exempt accommodation', for example, hostels or care homes.
For these purposes, a 'relevant body' is a county council in England, housing association, registered charity or voluntary organisation.