Henri Krishna examines the 104-week limit on claiming jobseeker’s allowance (JSA) housing costs, which will start to bite in January 2011.
Introduction
With much of the post-Budget focus on high profile cuts to a range of benefits, including housing benefit and help with mortgage interest payments, it is easy to overlook another imminent cut in help with housing costs. The 104-week limit on the payment of housing costs with income-based JSA, which was introduced on 5 January 2009, will start to bite on 3 January 2011. The limit was part of a package of measures designed to help avoid an increase in home repossessions resulting from the economic downturn, by reducing the ‘waiting period’ for housing costs to 13 weeks and doubling the maximum eligible loan to £200,000
1 Social Security (Housing Costs Special Arrangements) (Amendment and Modification) Regulations 2008 SI No.3195, as amended by SI No.3257/2009. It is interesting to note that the projected 50,000 repossessions per annum feared by some organisations when the effects of the credit crunch first became apparent in 2007
2 For England and Wales. Source: Shelter presentation, Teachers Building, Glasgow, 14 September 2010have not materialised, so the measures may have had some success. But the number of repossessions may rise with further job loses in the pipeline.
Operation of the 104-week rule
The 104-week limit on the payment of housing costs with income-based JSA applies to claimants covered by the new housing costs rules introduced on 5 January 2009 and amended on 5 January 2010 (see articles in Bulletins 208 and 214).
3 Regs 6 and 11 Social Security (Housing Costs Special Arrangements) (Amendment and Modification) Regulations 2008 SI No.3195The new rules, which reduced the waiting period for housing costs from 39 or 26 weeks to 13 weeks and increased the maximum loan eligible for housing costs from £100,000 to £200,000, apply to claims for JSA, income support (IS) and employment and support allowance (ESA) made from 5 January 2009, and to some claimants already in a waiting period prior to that date.
The 104 weeks do not include:
•weeks in which housing costs are paid under the old rules – ie, subject to the £100,000 limit;
•the waiting period itself and other weeks where housing costs are not in payment – ie, breaks in claims;
•periods before 5 January 2009;
•periods where housing costs were paid in a previous JSA claim which is not linked to the current claim.
In practice, this means that the earliest the 104-week time limit could expire is 3 January 2011.
Any JSA claimants who have been continuously getting housing costs for mortgages or loans on their homes under the new rules since 5 January 2009 will see these payments stop on 3 January 2011. The linking rules mean that these costs could only start to be included in a new JSA claim where there has been a sufficiently long break in JSA entitlement. In most cases the break will need to be more than 12 weeks, but in some cases it may be as much as 52 or 104 weeks, depending on why the JSA claim ended.
4 para 13 sch 2 JSA Regulations 1996. The 52 weeks applies to some claimants who cease entitlement to JSA because they are working or are on certain training schemes (para 13(14)). The 104 weeks applies to ‘welfare-to-work beneficiaries’ (para 13(12)).In addition to this, any new claim which is not linked would come under the January 2009 rules and require a new 13-week waiting period to be served before housing costs could be paid.
This means that where housing costs have already been paid for 104 weeks with income-based JSA, there would have to be at least a 12-week break in claiming plus a further 13-week waiting period following a new claim, giving a total of at least 25 weeks before entitlement to housing costs could resume. Depending on the reason for the break in claim, the period of non-entitlement to housing costs could be extended to 65 or 117 weeks. This would leave long-term JSA claimants with the choice of continuing to sign on and getting no more help with housing costs or signing off, being without benefit for at least 12 weeks, reclaiming, and then waiting a further 13 weeks before any more housing costs are paid. New claims which are linked to previous claims do not require a new waiting period to be served, but the 104-week limit continues to run, picking up from the date when the previous claim ended.
The 104-week limit does not apply where the claimant or claimant’s partner was entitled to IS or ESA within the 12 weeks prior to the start of the JSA claim. Note also that the 104-week rule only applies to claimants subject to the13-week waiting period and £200,000 loan limit, and as such it may be worth checking that the claimant was initially assessed under the correct rules, including any linking to prior claims.
The two-year limit is initially only likely to affect a small number of claimants (it is difficult to estimate numbers
5 The most up-to-date DWP statistics show 55,580 JSA claims of over two years and a further 198,290 of between one and two years, but no indication about which of these include housing costs. See http://83.244.183.180/100pc/wa/ctolddur/ ccstatgp/a_carate_r_ctolddur_c_ccstatgp_feb10.html.), but if the economic situation results in increasing numbers of long-term JSA claimants, the rule will affect more and more people as time passes.
Options for claimants affected
As the 104-week limit only applies to JSA, it is always worth exploring whether there is entitlement to IS, ESA or pension credit (PC) instead. Claimants will, of course, have to satisfy the conditions for claiming these benefits, although if they do not, their partner may be eligible to make a claim (note that the rules do not allow a new 104-week period to start where the JSA claim is simply swapped to a partner). Due to the operation of the linking rules, claimants transferring from JSA onto any of these other benefits would not need to serve a new waiting period, as periods of entitlement to JSA are treated as periods of entitlement to these benefits. But, equally, if they subsequently reclaimed JSA (eg, because they failed the work capability assessment for ESA), they may be treated as having been entitled to and in receipt of JSA while on IS or ESA (but not PC), and so would be caught by the 104- week limit again. One other point to note is that the £100,000 eligible loan limit that normally applies to new PC claims would be raised to £200,000 if the claimant was getting housing costs under the new rules with an IS, JSA or ESA award in the 12 weeks prior to the PC claim.
If it is not possible to claim an alternative benefit, there are a number of government schemes which could assist claimants affected by the 104-week rule, although the eligibility criteria are somewhat restrictive. In each part of the UK, there are two basically similar options available which can be succinctly described as ‘mortgage to rent’ and ‘shared equity’ schemes. The schemes involve a local housing association taking a whole or part interest in claimants’ properties, allowing them to remain in their homes and rent back the housing association’s share. Any proceeds left over from the sale of all or part of the property go back to the claimant either to cover other debts or as capital. This may affect continuing entitlement to means-tested benefits, such as income-based JSA and housing benefit. However, while the exact amount of proceeds generated from a sale is subject to a number of variables, as applying for these schemes involves doing so through an agency, advice should have been given about the effects on benefit entitlement as part of the purchasing process. Anyone applying under these schemes also has to remember that arrears will continue to accrue while an application is being processed, which could take several months. If mortgage arrears are mounting during this period, the eventual return to the applicant will be reduced (or even eliminated).
Claimants with potential or actual mortgage arrears resulting from the operation of the 104-week rule or any other cause should, of course, contact their lender(s) to explore possible areas for negotiation, and seek independent money advice. If this has not happened, the courts may well not grant a repossession order in any possession proceedings.
Anyone facing possession proceedings should seek independent advice and representation. In particular, voluntary surrender should not be an option that is considered without getting comprehensive advice first. Compulsory repossession can only be pursued and sanctioned through the courts on prescribed grounds and following prescribed procedures. Even where possession is granted, recourse may be available until any court order takes effect.
Should someone lose ownership of part or all her/his home and have to rent accommodation instead, s/he may face restrictions on her/his housing benefit entitlement resulting from changes to the local housing allowance announced by the Government in the June Budget.
Conclusion
The housing costs rules introduced in January 2009 to help alleviate a possible flood of repossessions due to the onset of the economic downturn may have been at least partially effective. The continuing severity of the economic situation and correspondingly high levels of unemployment means that the largely overlooked time limit on help with mortgage interest payments for JSA claimants is likely to start having a potentially devastating effect on those who were first hit by job cuts. Unless the Government quickly enacts further amendments to remove or extend the 104-week limit, and given the limited access to other benefits or government-supported schemes, increasing numbers of home owners are going to find that they are reliant on the goodwill and judgement of lenders and the courts to avoid losing their homes, as well as their livelihoods.
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