Scottish Discretionary Housing Payment: guidance manual

Section 2: About Discretionary Housing Payments

2. About Discretionary Housing Payments

2.1 DHPs provide financial assistance to a qualifying individual to meet, or help towards meeting, the individual's housing costs.

2.2 DHPs can be paid in support of any tenancy type.

2.3 DHPs for mitigation of the removal of the spare room subsidy and benefit cap are to be paid by an LA when they are satisfied that an individual has been affected by these reductions.

2.4 At their discretion, LAs may award DHPs to provide support with Earned Income Taper deductions, Non-Dependent deductions, the Shared Accommodation Rate, and where Local Housing Allowance rates do not meet an individual’s housing costs. Please note, this is not an exhaustive list.

2.5 At their discretion, LAs may award DHPs for non-welfare reform reasons, such as for rent in advance, deposits, and removals costs. However, it should be noted that the LA may provide these types of support through other mechanisms.

2.6 At their discretion, LAs may award DHPs to eligible individuals who can show financial hardship.

3. Housing costs that DHPs can be paid for

3.1 ‘Housing costs’ are not defined in Part 5 of the Social Security (Scotland) Act 2018 and this approach purposely allows broad discretion for interpretation. In general, ‘housing costs’ usually refers to rental liability, as well as:

• rent in advance
• deposits
• other lump sum costs associated with a housing need such as removal costs

3.2 Specifically in cases where individuals have been affected by the benefit cap, and have had their benefits reduced by more than their rent, further discretion should be exercised to take in to account other costs associated with housing. Any costs considered to be reasonably incurred in connection with housing to ensure the accommodation is habitable can be considered. For example, but not limited to, housing costs such as electricity, gas, heating bills, and service charges may be paid, in combination with rent, up to the level of the capped amount. LAs may make local policy decisions on what evidence of other housing costs they are willing to accept in support of a claim.

4. When a DHP can be awarded

4.1 A DHP can only be awarded once an individual is in receipt of either:

• housing benefit (HB)
• an award of universal credit (UC) which includes an amount for rent and the end of the first assessment period has passed

4.2 Owner-occupiers are not eligible to receive DHPs, with the exception of Shared Ownership properties which carry a rental liability.

4.3 Having an Alternative Payment Arrangement in place, or the Scottish Choice to have rent paid directly to a landlord, should not affect how an individual’s application for a DHP is assessed or the size of any resulting DHP.

5. Support for those affected by the removal of the spare room subsidy (bedroom tax)

5.1 Working Age individuals (and some mixed age couples where one is pension age and one is working age) living in the social rented sector face a reduction to their eligible rent if they are seen to under-occupy their property, based on criteria set by the Department for Work and Pensions. The level of under-occupation is determined by size criteria rules which calculate how many bedrooms are thought to be required for a household. The rates of reduction to the eligible rent for those affected by this policy are:

• 14 per cent where the household is seen to under-occupy by one bedroom
• 25 per cent where the household is seen to under-occupy by two or more bedrooms

5.2 We are committed to fully mitigating the removal of the spare room subsidy and expect that anyone affected who applies for a DHP should receive one to cover their shortfall.

5.3 LAs should continue to check whether an individual is actually exempt from the removal of the spare room subsidy in the first instance, as well as provide support to those affected who wish to move to a smaller property.

5.4 Additional funding is provided annually to LAs to support individuals affected by the removal of the spare room subsidy. Each authority may wish to consider how best to administer this type of DHP to ensure efficiency.

6. Support for those affected by the benefit cap

6.1 Since April 2013 the total amount of benefit paid to working age individuals has been subject to a cap determined by the UK Government. The benefit cap is applied either through HB or UC, as appropriate.

6.2 The benefit cap is applied by LAs through HB payments. When a household’s total benefit entitlement exceeds the benefit cap level, the LA reduces the level of HB by the excess amount.

6.3 Where UC is in payment the benefit cap is applied through UC.

6.4 LAs are provided with information which identifies capped individuals alongside other data that is shared to support individuals who may be eligible for the Council Tax Reduction (CTR) Scheme.

6.5 We have committed to mitigating the benefit cap as fully as possible within devolved powers and expect that anyone eligible who applies for a DHP for benefit cap mitigation should receive one to the maximum amount permitted by the DHP scheme.

6.6 In cases where the capped amount exceeds rent, other reasonable costs associated with housing can be included. For example, electricity, gas, heating bills, and service charges up to the level of the capped amount or total housing costs (whichever is lower).

6.7 We expect consideration to be given as to whether an individual can be made exempt from the cap in the first instance. LAs should assess if individuals are eligible for any of the exemptions in Section 11. Exemption from the benefit cap is preferable to mitigation.

6.8 Those that are affected by the benefit cap will continue to have access to and receive support from work coaches in Jobcentre Plus to help them find work. People in receipt of Working Tax Credit, or in UC who earn above the current earnings threshold, are exempt from the benefit cap.

6.9 The Scottish Government annually provides additional funding to LAs to support individuals affected by the benefit cap. Each authority may wish to consider how best to administer this type of DHP to ensure efficiency.

See Section 11: Exemptions from the benefit cap for more information.

7. What DHPs cannot cover

7.1 The 2018 Act does not set out what cannot be included in “housing costs”. However, in most cases, housing costs usually refers to rental liability only (with the exception of benefit cap cases).

7.2 DHPs cannot be used for the acquisition of furniture or household equipment or the use of such furniture or equipment where that furniture or household equipment will become the property of the individual by virtue of an agreement with the landlord.

7.3 A DHP cannot be used for the mitigation of UC deductions that arise because an individual is in receipt of a benefit that is treated as income. For example, when an individual is in receipt of carer’s allowance, or carer support payment, their UC is reduced because carer’s benefits are treated as income. However, the individual will also be entitled to the carer element of UC and they will not be affected by the benefit cap.

7.4 The 2018 Act also provides some restrictions on the power to make payments:

• financial assistance may not be given by way of a loan
• financial assistance may not be given where the need for the assistance arises solely from reduction, non-payability or suspension of a reserved benefit as a result of an individual's conduct
  • however, even in these circumstances, financial assistance may be given where the need for the assistance in question arises from some exceptional event or exceptional circumstances and is immediate
    • examples of exceptional events may include, but are not limited to;
      • sudden and severe financial hardship due to a natural disaster
      • an unexpected medical crisis (serious illness or injury) that significantly impacts the individual’s, or their dependants’, ability to meet basic needs
      • sudden bereavement, family breakdowns, or unexpected caregiving responsibilities
      • victims of crime who require immediate assistance to cope with the aftermath

See Section 12: What DHPs cannot cover for more information.

8. The level of a DHP award

8.1 The Social Security (Scotland) Act 2018 (section 88) simply says that LAs can pay a DHP to someone entitled to HB or UC (which includes an amount for rent) in addition to this assistance in order to meet housing costs. ‘Housing costs’ are not defined in Part 5 of 2018 Act, but in general, ‘housing costs’ usually refers to rental liability, except where someone has had the benefit cap applied.

8.2 In benefit cap cases a DHP award can be made above the eligible rent up to either the total amount removed by the cap, or total housing costs, whichever is lower. Housing costs are those which can be reasonably incurred in connection with housing.

8.3 Any HB already paid towards ‘housing costs’ should be deducted when calculating the amount of a DHP, to avoid duplicate provision. See Section 13: Legal considerations, for more information.

9. Length of payments

9.1 The length of time over which a payment is made is at the discretion of the LA.

9.2 The period of the award and, importantly, any specific end date, should be made clear to the individual. LAs may also want to provide information on how to re-apply for a DHP if necessary.

9.3 If the DHP is to meet a one-off housing cost such as a deposit or rent in advance, there is no requirement to specify the period of the award.

9.4 An LA can consider making long term awards, where appropriate, to those who are receiving DHPs to mitigate either removal of the spare room subsidy or the benefit cap. LAs can also, at their discretion, make long term awards where an individual has on-going needs, for example, such as a disabled person living in specially adapted accommodation.

9.5 A time-limited award may be appropriate when an impending change of circumstances will result in an increase in benefit. It may also be appropriate to make a short-term award to give an individual time to organise their financial or housing circumstances, particularly if they are trying to find alternative accommodation or gain employment. It should be remembered that if individuals have specific difficulties moving house without support you may wish to consider signposting them to other support available to assist them in moving.

10. Rent deposits and rent in advance

10.1 A DHP can be awarded for a rent deposit or rent in advance for a property that the individual is yet to move in to if they are already entitled to HB or UC which includes an amount for rent at their present home. Any HB (or UC with housing element) already paid towards ‘housing costs’ should be deducted when calculating the amount of a DHP, to avoid duplicate provision.

11. Backdating

11.1 As a guide, a DHP for any purpose can be backdated up to 12 months, longer under exceptional circumstances and if LA budgets allow. When deciding whether to backdate a DHP, each application should be considered on its own merits.

11.2 Usually, DHPs are made in respect of an immediate need rather than a past period, however, you may consider it appropriate to make a backdated DHP award. For example, where an individual is subject to a rent shortfall due to welfare reforms and has accrued rent arrears during the transition period between a reduction in benefit and moving into employment. In this case it may be prudent for you to award a backdated DHP to meet those arrears of the shortfall so as not to undermine the individual’s move into employment. In other cases, a DHP could be used to facilitate a move of home (such as through a mutual exchange) where a landlord will not allow a move for someone who is in arrears.

11.3 It should be noted that a DHP can only be considered for a period where the linked HB or relevant award of UC is payable. This is of particular relevance to requests for a period of backdated DHP, since backdating cannot cover arrears accrued while not in receipt of these benefits.