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27 January 2016

CHC's response to Housing Benefit change ahead of today's debates

In his Autumn Statement, the Chancellor announced that Housing Benefit for social housing tenants would be limited to the Local Housing Allowance rate set for new tenancies from 2016, with this change due to come into effect from 2018.

The Department for Work and Pensions has since clarified that the cap will also be applied to housing benefit for tenants in supported and sheltered housing. They added that they will seek to protect people as far as possible through the local system of Discretionary Housing Payments.

We have written to Lord Freud, with other signatories from across the sector, to express our grave concerns about these implications for Supported Housing in Wales, and the impact on tenants who rely on this service. The application of a cap on the housing element of future benefit claims, set at Local Housing Allowance levels, would be severe.

Supported Housing is accommodation designated for some of the most vulnerable people in our communities. It provides tenants with higher levels of support than in general needs housing, and helps tenants with the confidence and know-how to take control of their lives. It covers a huge range of housing schemes which help tenants who are experiencing a huge range of problems, including those who are fleeing domestic abuse, suffering from mental health problems, or those who have experienced homelessness.

The provision of this additional support incurs a greater cost for landlords than the provision of general needs housing, and this is reflected through higher levels of rent. Furthermore, these additional costs do not necessarily reflect the costs pressures associated with private sector rents, which are what ultimately dictate Local Housing Allowance levels. Typically, the LHA is lower in more deprived areas and higher in more affluent parts of the country, meaning that the viability of supported housing in less well-off areas is threatened by the use of LHA to cap financial support.

We are in the process of modelling the impact of these changes and gathering evidence to highlight the risk it presents to providers of supported and sheltered housing.

One Welsh housing association has reported a scheme which will be affected by the cap, where two vulnerable tenants are supported in a four bedroom house which contains a safe room and accommodation for staff to provide care and support on a 24/7 basis. Under the proposed cap, this scheme would see an annual rental loss of £11,646.

Projects offering intensive support are widespread across Wales. There are 36,908 supported housing units across the whole country; 22,110 owned and run by housing associations and a further 14,798 by local authorities. The services are delivered by social landlords who have the specialist knowledge and expertise to support these tenants. A survey of Community Housing Cymru members[1] estimates that 82% of specified accommodation, such as these projects, would be over the LHA cap.

To be clear, cuts of this scale will threaten the viability of supported and specified accommodation in the social rented sector in the future. The cap is economically counter-productive, with any reduction in spending on social security likely to be far outstripped in the long-term by presentations to health services and other support agencies.

Meanwhile, under 35s will see their rental income capped at the Shared Accommodation rate under LHA. Another Welsh housing association has 48 bedsit units as part of their stock, predominantly housing tenants under the age of 35. The difference between the rent levels for these units and the Local Housing Allowance would cost that landlord £1117 per tenancy per year; a potential total loss of £53,616 each year. Community Housing Cymru members currently provide homes, to 6,440 tenants in this age group, with a further 1,571 living in local authority accommodation. Shelter Cymru figures have shown that 92% of these tenants would lose out if they signed their tenancy under the upcoming proposals.

The application of the under 35s Shared Accommodation Rate to social rented tenancies is of concern to us beyond the direct impact it would have on the funding of supported housing. We are concerned about the likely effect it will have on the ability of single people in supported or temporary housing to move onto permanent accommodation at the appropriate time. We can point to evidence of the impact that the Shared Accommodation Rate in the private rented sector in England has already had on the time young people spend in supported housing. A recent report by Homeless Link highlights that the average length of stay amongst young homeless people has increased by 8.5 months to 16 months.

As stated by our partners in Scotland and England, we are concerned about the Government’s proposal in the Spending Review which states that Discretionary Housing Payment will be the vehicle for dealing with some of the resulting shortfall for supported housing. We have concerns that due to the discretionary and temporary nature of the DHP fund, this will put a significant element of funding for supported housing on an insecure footing and as a consequence could lead to a reduction in the provision of existing services and put new developments at risk at a time when pressure on services is increasing.

The Discretionary Housing Payments system is not designed or funded to meet all requests for assistance and to rely on it to help those in supported housing with a new benefit cap would leave local authorities to decide between individuals with varying levels of support needs. This would both be an unsatisfactory and administratively costly approach to take. Supported housing would become unaffordable for those it is designed to assist and would cease to be an option. In the longer term, much supported housing will cease to be sustainable. Community Housing Cymru estimates that the shortfall in rent (for those that responded to their survey), for specified accommodation alone will be at least £10m per annum. The £35m increase in the proposed UK-wide DHP budget from 2018/19 seems unlikely to be sufficient to protect the most vulnerable in society.

The impact of the LHA cap will be felt very soon as new tenants in supported housing from 1st April 2016 will face uncertainty about their future ability to pay their rent. This will be a particular issue for those who need to live in supported housing on a longer term basis, for example, sheltered housing, retirement housing or adapted housing.

These changes risk the firm foundation supported housing provides for many people as they deal with disability, change and/or transition in their lives.

For further information on capping housing benefit to LHA rate, please read our in depth briefing.

[1] The survey was sent to CHC’s 35 members with a response rate of 66%.