Eligible rent and service charges
Eligible rent is the figure Housing Benefit is actually calculated on. It is not always the rent on your tenancy agreement. It is your actual rent plus any service charges you have to pay, minus anything the rules say does not count. Getting this figure right matters because every later step, the bedroom tax reduction and the means test, works from it.
What goes into eligible rent
GOV.UK puts it plainly: eligible rent is your actual rent plus any service charges you have to pay, such as lift maintenance or a communal laundry, but not things like heating or water costs for your home. Service charges that keep the building running and are a condition of the tenancy generally count. Charges for things that are really personal services, fuel, water, meals or personal care generally do not. If your rent is a single figure that bundles several charges together, your council will split it, and you should ask for that split in writing so you can check it.
Social housing: eligible rent first, bedroom reduction second
For council and housing association tenants, the calculation starts with eligible rent, then applies the spare-bedroom reduction if you are of working age and have more bedrooms than your household needs: 14% for one spare bedroom, 25% for two or more. GOV.UK's own example makes the order clear. With eligible rent of £100 a week and one spare bedroom, the eligible rent is reduced by 14% to £86 a week, and Housing Benefit is calculated using that £86 figure. The reduction comes off the rent figure, not off the final award, which is why the bedroom tax guide works through it separately.
Private renting: the lower of two figures
For private tenants, the starting figure is the lower of your eligible rent and your Local Housing Allowance rate for your area and bedroom need. If your rent is below the LHA rate, your eligible rent is the starting point. If your rent is above it, the LHA rate is. Either way, the means test then applies: your income, your partner's income, savings over the disregarded amount, and deductions for other adults in the household can all reduce the award further. The LHA guide gives the BRMA examples that show how wide that first cap can be.
Income, savings and other adults in the home
Housing Benefit is means-tested. The council looks at earnings, pensions, benefits and savings for you and your partner, and at the income of non-dependants, adult relatives or friends living with you who are not part of your claim. Non-dependant deductions reduce the award, and the amount depends on the non-dependant's income and circumstances, so a grown-up child moving back home or a lodger moving in can change an award even though your rent has not changed. Report those moves straight away, as the changes guide explains.
Capital: the £16,000 ceiling and the tariff
Savings and investments count as capital, but the home you live in does not. If you or your partner have more than £16,000 in capital, you normally cannot get Housing Benefit at all, unless you receive the Guarantee Credit of Pension Credit. Below that ceiling, capital is turned into a weekly tariff income and added to your income for the calculation. For working-age claimants, the first £6,000 is ignored and £1 a week is added for every £250, or part of £250, above £6,000. For pension-age claimants, the first £10,000 is ignored and £1 a week is added for every £500, or part of £500, above £10,000.
Two worked examples show the rounding, which catches people out. A working-age household with £8,652 in capital is £2,652 over the £6,000 floor, which is eleven part-units of £250, so £11 a week of tariff income is added. A pension-age household with £13,268 is £3,268 over the £10,000 floor, which is seven part-units of £500, so £7 a week is added. If you already receive Income Support, income-based Jobseeker's Allowance, income-related Employment and Support Allowance or Guarantee Credit, capital is normally disregarded for Housing Benefit purposes because it has already been assessed for that benefit.