The Chartered Institute of Housing (CIH) has welcomed the announcement of the new Universal Credit but believes that more work needs to be done to ensure the housing component reflects local housing costs and does not penalise tenants and their landlords.

CIH has expressed significant concerns about the impact that the government welfare reform proposals will have on families' ability to pay their rents.

Richard Capie, CIH Director of Policy and Practice said: "While we believe that the new simplified system can play a key role in supporting people into work and off welfare, a key element that needs to be got right is support for housing costs. The housing part of any credit will be for people both in and out of work. It is a key element of support for low income working people who are renting privately in areas where housing costs are otherwise unaffordable. It is important that housing costs are able to reflect local housing markets."

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CIH is particularly concerned that the introduction of the new out of work benefit cap at £500 per week does not take into account the massive variation in housing costs that exists around the UK and will create hardship for families.

CIH is warning that if the housing element of the new Universal Credit is not sensitive to local housing costs it will not only impact on individuals but also have implications for private and social landlords and jeopardise access to private finance to build new homes.

Mr Capie concluded: "We need welfare reform that lasts and that individuals and businesses can plan against. The risk is that the approach to housing costs in the current plans won’t be sustainable and will require further adjustments in future."

(CD/KMcA)