Service charges covered by housing benefit

Some service charges can be paid by housing benefit if paying them is a condition of occupying the property.[1]

Service charges are defined as periodical payments for:[2]

• services which are performed

• facilities that are provided, including the use of furniture

The letting agreement might show service charges as a payment which is either:

• included in the total rental figure

• added as a separate charge to the rental figure

• classified as something else, such as a ‘housing management fee’

How a charge is expressed in an agreement does not determine whether it is defined as a service charge for housing benefit purposes.

Services that are funded by a third party and are not included in the charges to the resident are not part of the calculation for housing benefit.[3]

When a local authority calculates housing benefit entitlement, it works out the maximum amount of rent and other charges that can be covered by housing benefit. This sum is called the ‘eligible rent’. This could be less than the amount that a person pays to their landlord.

How the eligible rent sum is reached depends on the type of accommodation.

Social renters

For most social renters, the eligible rent is based on the actual weekly charge minus the service charges that are ineligible for housing benefit.

The eligible rent might be reduced further based on rules that restrict eligible rents for social rented sector tenants.

Private renters

How the eligible rent is calculated for private renters depends on which rules apply to the claimant.

LHA rules

For most private renters, the eligible rent is worked out using the LHA rules. The rules about service charges which are described on this page do not apply to these claimants.

Old scheme rules

When the eligible rent is based on the ‘old scheme’ rules, the local authority must deduct ineligible service charges from the total weekly charge.[4]

This includes when the claimant is either:

• renting from a private landlord and has received housing benefit continuously at the same address since before 2 January 1996 (or at a different address if they moved due to fire, flood, explosion or a natural catastrophe)

• renting from a not-for-profit landlord or charity and living in 'exempt accommodation'[5]

Rent referral rules

The local authority also must deduct ineligible service charges from the total weekly charge when the eligible rent is worked out using the rent referral rules.

This includes when the claimant is either:[6]

• living with a private landlord and the rent includes board and attendance

• paying site fees or mooring charges to a private landlord for a caravan, mobile home or houseboat

• renting from a private landlord and has received housing benefit continuously at the same address since before 7 April 2008

Eligible service charges usually relate to services in communal areas.[7] This can include:

• water charges[8]

• laundry facilities, such as a laundry room[9]

• TV and radio relay charges[10]

• fuel[11]

• charges relating to cleaning and maintenance[12]

This list is not exhaustive.

A service charge can only be included as part of the eligible rent for housing benefit if:

• its payment is a condition of occupying the property[13]

• it is not one of the charges that are listed as ineligible in the regulations[14]

• the amount is reasonable[15]

Reasonable service charges

The local authority must compare the cost of an eligible service to similar services to decide whether it is excessive. If the local authority considers it to be excessive, it must decide how much would be reasonable and deduct the excess amount.[16]

Most charges that relate to a resident's non-communal daily living expenses are ineligible for housing benefit. Ineligible service charges are payments for:[17]

• fuel

• water

• meals

• personal care and support

The local authority deducts ineligible service charges from the total weekly charge when it calculates the eligible rent for housing benefit. The amount deducted depends on the type of service charge.

When charges are made for fuel, the actual amount is used if known. Otherwise, a fixed-rate is used to decide how much to deduct from the eligible rent.[18]

When charges are made for meals, a fixed-rate deduction is applied based on the number of meals provided.[19]

The rates are set by the DWP each April.

For any other charges, the amount specified in a claimant's tenancy agreement or other supporting documents is usually the sum that is treated as ineligible for housing benefit. When the amount charged cannot be identified, or is unrealistically low, the local authority decides the reasonable amount for that service.[20]

Home owners cannot claim housing benefit to pay for service charges or other housing costs, such as ground rent. Claimants might be able to get help with these charges if they are entitled to:

• pension credit

• income support

• income-related employment and support allowance

• income-based jobseeker's allowance

• universal credit

Shared owners can claim housing benefit for help towards eligible service charges.[21]

Service charges for shared ownership properties are assessed according to the rules for social renters.