Good afternoon
Universal Credit recipients are due to receive a 10.1 percent rate rise, effective from 10th April 2023.
Due to the increase, Universal Credit standard allowances will increase:
- From £265.31 to £292.11 for single people aged under 25
- From £334.91 to £368.74 for single people aged 25 and over
- From £416.45 to £458.51 for joint claimants both aged under 25
- From £525.72 to £578.82 for joint claimants both aged 25 and over
Additional elements for children, disability, carers, work allowance disregards will also increase by 10.1%, whereas allowances for Child Care costs will remain static at 2022/23 levels. Full details of the new rates affecting all benefit types can be found here
One of my London based, private clients, asked me to explain how the rate might affect some of his single tenants who are affected by the Benefits Cap. In previous years, the increase in personal allowances had made no impact on the tenant’s shortfall.
The good new is, the level of the Benefit Cap will increase by 10.1% in 2023/24 the first time the cap has been increased.
From April 2023, the Benefit Cap will be increased to:
* £22,020 for couples and lone parents outside Greater London and
*£14,753 for single adults with no children.
*Inside Greater London, the new rate will be £25,323 for couples and lone parents; and
*£16,967 for single adults with no children.
So, as an example, let’s say you’re a landlord in Croydon, operating an HMO, and charging the LHA rate of £1146 per room. Jay, your tenant, aged 40, claims UC and currently receives £334.91 standard allowance to cover personal expenses, and is liable to pay you rent of £1146.
His total UC entitlement (assuming he’s no other form of income) is:
£334.91 + £1146 = £1480.91 but restricted by the Benefits Cap ceiling to a max of £1284, creating a shortfall of £196 pcm.
From 10th April 23 his assessment would be based on:
£368.74 + £1146 = £1514.74 but restricted to a Benefits Cap monthly ceiling of £1413, creating a shortfall of £101.74 pcm.
So, unlike in previous years, no matter whether your tenant is a single person, couple or single parent, currently affected by the Benefit Cap, the rise in personal allowances, coupled with the increase in the Benefit Cap ceiling, should be beneficial. It doesn’t solve the problem of shortfalls or the likelihood of rent arrears but, it’s a step in the right direction, at least, for one year.
Regards
Bill Irvine
