Citation, commencement and interpretation

1.—(1) These Regulations may be cited as the Social Security (Housing Costs) (Standard Interest Rate) Amendment Regulations 2010.

(2) These Regulations come into force—

(a)in any case where a relevant benefit is payable to a person in arrears in respect of a benefit week that includes 1st October 2010, on the first day of that benefit week;

(b)in any case not falling within sub-paragraph (a) where a relevant benefit is payable to a person in respect of a benefit week that includes 1st October 2010, on the first day of the first benefit week to commence for that person on or after 1st October 2010;

(c)in any other case, on 1st October 2010.

(3) In these Regulations—

“the Income Support Regulations” means the Income Support (General) Regulations 1987(6);

“the Jobseeker’s Allowance Regulations” means the Jobseeker’s Allowance Regulations 1996(7);

“the State Pension Credit Regulations” means the State Pension Credit Regulations 2002(8);

“the Employment and Support Allowance Regulations” means the Employment and Support Allowance Regulations 2008(9);

“benefit week” has the same meaning as in—

“relevant benefit” means—

Amendments relating to the standard rate of interest

2.—(1) This regulation applies to the following provisions—

(a)paragraph 12 (the standard rate) of Schedule 3 (housing costs) to the Income Support Regulations(13);

(b)paragraph 11 (the standard rate) of Schedule 2 (housing costs) to the Jobseeker’s Allowance Regulations(14);

(c)paragraph 9 (the standard rate) of Schedule 2 (housing costs) to the State Pension Credit Regulations(15);

(d)paragraph 13 (the standard rate) of Schedule 6 (housing costs) to the Employment and Support Allowance Regulations(16).

(2) In each of the provisions to which this regulation applies, for sub-paragraph (2) substitute—

“(2) Subject to the following provisions of this paragraph, the standard rate is to be the average mortgage rate published by the Bank of England in August 2010.

(2A) The standard rate is to be varied each time that sub-paragraph (2B) applies.

(2B) This sub-paragraph applies when, on any reference day, the Bank of England publishes an average mortgage rate which differs by 0.5% or more from the standard rate that applies on that reference day (whether by virtue of sub-paragraph (2) or of a previous application of this sub-paragraph).

(2C) The average mortgage rate published on that reference day then becomes the new standard rate in accordance with sub-paragraph (2D).

(2D) Any variation in the standard rate by virtue of sub-paragraphs (2A) to (2C) comes into effect—

(a)for the purposes of sub-paragraph (2B) (in consequence of its first and any subsequent application), on the day after the reference day referred to in sub-paragraph (2C);

(b)for the purpose of calculating the weekly amount of housing costs to be met under this Schedule, on the day specified by the Secretary of State(17).

(2E) In this paragraph—

“average mortgage rate” means the effective interest rate (non-seasonally adjusted) of United Kingdom resident banks and building societies for loans to households secured on dwellings published by the Bank of England in respect of the most recent period for that rate specified at the time of publication(18);

“reference day” means any day falling after 1st October 2010.”.

Revocation

3.  Regulation 2 (amendments to the standard rate of interest) of the Social Security (Housing Costs Special Arrangements) (Amendment and Modification) Regulations 2008(19) is revoked.

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the standard rate which is used to calculate the amount of interest payable on a qualifying loan under the housing costs provisions of the Income Support (General) Regulations 1987, the Jobseeker’s Allowance Regulations 1996, the State Pension Credit Regulations 2002 and the Employment and Support Allowance Regulations 2008.

Regulation 2 amends each of those sets of Regulations with the result that, on the coming into force of these Regulations, the standard rate is to be the effective interest rate for loans to households secured on dwellings (“the average mortgage rate”) published by the Bank of England in August 2010.

Regulation 2 also provides that, after 1st October 2010, the standard rate is to be based on the average mortgage rate published by the Bank of England in respect of the most recent period for that rate specified at the time of publication. Changes to the standard rate are triggered when the standard rate and the average mortgage rate differ by 0.5% or more. When that happens, the Bank of England average mortgage rate becomes the new standard rate. For the purposes of calculating the weekly amount of housing costs to which a person is entitled, any change in the standard rate comes into effect on the day specified by the Secretary of State.

Regulation 3 revokes regulation 2 of the Social Security (Housing Costs Special Arrangements) (Amendment and Modification) Regulations 2008 which provided for a standard rate of 6.08%.

A full impact assessment has not been produced for this instrument as it has no impact on the private or voluntary sectors.