From today the Coalition Government will cap Housing Benefits for private sector tenants from a staggering £104,000 in some cases to an absolute maximum of £20,800 a year for a four bedroom property.
The reforms will help put an end to the rapid growth seen in private sector rents and will lead to fewer people being put off work because they fear losing their generous housing benefits.
Iain Duncan Smith, Secretary of State for Work and Pensions said:
"The failure to reform Housing Benefit has left us in the absurd situation where some benefit claimants could claim over £100,000 a year to live in large houses in expensive areas. This is unacceptable when hard working individuals and families are struggling either to find affordable private rents or pay their mortgages.
"Even after the reforms, Housing Benefit will be able to meet rents of £20,800 a year so there is no reason why anyone should be left without a home. With a massive deficit, tough choices have to be made - but we have pushed ahead with these changes in record time to bring fairness back to the system so that hard working families no longer have to subsidize people living in properties they themselves could not afford.
"Our Discretionary Housing Payment Fund will provide a safety net for those who need it, with an additional £190m being invested over four years to smooth the transition."
The measures coming into force today apply to new claimants. Existing claimants will be protected at their Local Housing Allowance rate for up to nine months from the date their claim is reviewed by their local authority. This will allow claimants time to adjust to any reduction in Housing Benefit entitlement and in practice means many existing claimants will not be affected until after January 2012.
And to help implement the changes Ministers have temporarily extended the discretion of local authorities to make direct payments to landlords in return for lowering their rents to affordable levels - aimed at allowing more claimants being able to secure new tenancies or stay in their existing homes and that landlord's will maintain a stable and reliable income.
The full measures coming into force today are: