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Proposed changes to housing, housing advice and housing benefit since June 2010
Removal of security of tenure for council tenants, introduce
new flexible tenancies
Discharge of homelessness duty into the
PRS
Abolition of regional
spatial strategies
Cut to capital spend on housing of 60%
Reform of Housing Revenue Account allowing councils to borrow money
to build homes
Review of allocations
policies
80% affordable rent product to be introduced
Ending of the 5-bedroom rate, LHA restricted to 4-bedroom rate
Capping the maximum rates of
LHA that can be paid for each size
of property
Setting the maximum LHA paid at the 30th percentile
rather than the median
Increasing deductions for non-dependants
living with HB claimants
SRR raised - paid to everyone under 25 to everyone under 35
Maximum rate of HB linked with Consumer Prices Index (CPI)
Capping total benefits for households out of work or working up to 16 hours a week to £26,000 per year
Limiting working age HB entitlement to
reflect household size
in the social rented sector
Introduction of Universal Credit Remove ring fence
from Supporting People, PRS
renewal funds
Wholesale changes to
planning system
Wholesale changes to Legal
Aid, including removal of legal aid for Welfare Reform cases
In summary – what does this mean?
Three pieces of legislation going through Parliament represent the biggest shake up of housing and housing benefit policy in a generation – Localism Bill, Welfare Reform Bill and Legal Aid Bill
Cut of 60% to affordable housing budget means grant rates per unit will fall dramatically – move to up to 80% rents is a way of making up this shortfall
A rent on a four bedroom property in Haringey would rise from £126 a week to £390 a week if it was moved to 80 per cent of market rent
Legal aid cuts mean huge concerns over funding for housing advice services – advice only funded at crisis point of losing home
Further funding cuts mean services dramatically scaled back - Homeless Link found that homelessness services report an overall funding loss of 25.3% for the period 2011/2012
Welfare reform policies
As a result of these reforms:
23% of private tenants in London stand to lose over £20 per week in LHAUp to 44,000 households in London will be pushed into serious financial difficulty. They will have three options - hope their landlord will lower the rent; move to a cheaper home; or become homeless. The GLA estimates that households placed in TA across London could increase by 4,865 by March 2012
Welfare Reform Bill
The CPI link
The ‘shopping basket’ used to calculate CPI places more weight on restaurant & café costs than it does rent.
Welfare Reform Bill gives sweeping powers on setting Housing Benefit. •Gives power to link housing benefit to CPI not local rents •Gives power to set a total cap on benefits to out of work households, raise the age for Shared Room Rate to 35 and reduce HB for social housing residents who are under-occupying
If rent rises continue to outstrip CPI, in future the value of benefit will drastically fall in real terms.
This will mean increasing areas of the country becoming no-go zones for low-income claimants as LHA falls further and further below local rents. Lower income groups will be priced out of many areas of the UK and moved away from job opportunities.
1997/8 – CPI Rents2007/8
30% 70%
Impacts of Welfare Reform Changes on London
Research by London Councils found that up to 82,000 households in London will be forced to move
By 2016, if all proposed changes go ahead, only 36% of neighbourhoods in London will be largely affordable to LHA claimants
Less than 10% of City of London, Westminster, H&F, K&C, Islington will be largely affordable
97% of Barking and Dagenham, 76% of Newham, 73% of Enfield will remain largely affordable
Interactions and the impacts on Housing Supply
Impact on Private Rented sector
Fewer landlords willing to let to LHA claimants BUT Households finding owner occupation unsustainable turning to the PRSHouseholds unable to access social housing turning to the PRS
Uncertainty for landlords
Disincentive to those currently or considering letting to HB/LHA tenants - around 60 per cent of landlords currently renting to HB tenants in London would not reduce their rent by even a small amount if the tenant could no longer pay the full rent due to changes in LHA.Fear of a significant reduction in the availability of the PRS for Benefit claimants - when the shortfall in rent rises to over £20 a week, over 90 per cent of landlords renting properties to LHA recipients in London would look to evict the tenant when they fall into arrears or not renew the tenancy at the end of the period. Possible reduction in the number of landlords willing to accept temporary accommodation contracts
Social Sector
Increased demand as the PRS shrinks for those on benefitIncreased demand for temporary accommodation
A more detailed look at some other changes – and some questions….
2013 – Limiting Working Age HB entitlement to reflect the household size in the social sector
This may help social landlords to make best use of stock However the process could be complicated eg.
Is there alternative accommodation available? Will arrears mount before suitable accommodation is found? This change will be taking place after 2 years of increasing non dependent deductions
being taken, will that increase the numbers involved?
2012 – Raising single room rent or shared room rent from 25 to 35
This will effect all private sector claimants ie HB and LHA casesThe possible shortfalls in London range from £70 to £140 a weekThis will force people under the age of 35 to share/sofa surfAre there enough HMOs ? Do we want any more? Will there be any DHP for this level of shortfall?
Lobbying - What you can do
Shelter is lobbying for housing costs to be removed from the total benefit cap. We will also be pushing for greater grace periods - e.g. that someone in London who loses their job after paying NI for years shouldn’t instantly be subject to the cap. Shelter is lobbying for adapted homes to be exempt from the under-occupancy cut. , We’ve also been pushing for a wider concession for anyone on DLA, which would bring it inline with the overall cap exemption. Shelter believes that the following groups should be exempt from the SRR change:•Former rough sleepers•Ex-offenders•People fleeing domestic violence•Parents with caring responsibilities •Pregnant women•Other vulnerable groups, to be defined via consultation