A shortfall in crisis support for people who cannot pay their rent could leave tenants facing eviction.
Cuts to benefits are expected to leave households in the district £4m a year worse off after government welfare reforms come into force next week.
Wakefield Council is expecting greater demand for Discretionary Housing Payments (DHP) as tenants face the risk of rent arrears – but the local authority only has £750,000 to cover the payments.
A report to the council’s cabinet said: “The impact of the housing benefit changes are estimated to result in reduced benefits payments totalling around £4m.
“The funding available to make Discretionary Housing Payments is only £749,505. It is therefore clear that this is insufficient to address the shortfall in household income.”
People hit by the government’s “bedroom tax”, which will cut housing benefit for more than 5,000 Wakefield tenants with spare rooms, could also be ineligible for DHP because government guidelines say the payments are not to compensate for changes to the benefits system.
The council said in a statement: “Those affected by the ‘under-occupation’ rules in particular do not have an automatic entitlement to a DHP. Their needs will be assessed according to the criteria in the policy. Any DHP award will only offer a short-term solution.”
People who need help paying their council tax will also not be eligible for DHP under changes to the scheme.
Cuts to financial support will affect an estimated 19,300 working-age people in Wakefield.
The cabinet report said: “When Council Tax Benefit is abolished in April 2013 DHPs will not be available where the additional financial assistance is needed due to a shortfall of Council Tax support.”
The DHP policy had been amended to prioritise support for households in most need, the report said.
It said around 9,500 families with children would be affected by the welfare reforms and about 1,600 households where the claimant or their partner is disabled will also be hit.
The report said: “The opinion of Family Service colleagues is that these changes are likely to have an adverse impact on family financial management, with potential for households to enter into debt, which may increase the numbers of young people living at, or below, child poverty levels, with the subsequent risk of these children and young people achieving poorer outcomes.
“There could be a greater risk of eviction, resulting in a move of residence or homelessness.”