cipfa.org.uk cipfa housing advisory network 03 february 2012 welfare reform & universal credit /...

cipfa.org.ukCIPFACIPFA Housing Advisory Housing Advisory NetworkNetwork

03 February 2012

Welfare Reform & Universal Credit / Affordable Rents / Supported HousingWelfare Reform & Universal Credit / Affordable Rents / Supported Housing


Welfare Reform & Universal Credit Welfare Reform & Universal Credit

The economics of supply and demandThe economics of supply and demand


Welfare Reform & Universal CreditWelfare Reform & Universal Credit

Government Proposals for future support for those living in Supported Government Proposals for future support for those living in Supported HousingHousing

The economics of supply and demand apply just the same hereThe economics of supply and demand apply just the same here



8 Major Changes8 Major Changes

1. Changes from 50th percentile to 30th percentile

2. Caps on the Maximum Local Housing Allowance Payable, By Property Size.

3. Increasing non-dependent deductions

4. Increasing upper age limit for Shared Accommodation Rate (single room rate) from 25 to 35 years old.

5. Change to using CPI to up-rate benefits rather than RPI

6. Limiting HB Payable to Working Age Tenants, By Property Size

7. Limiting total benefit payable to non-working households of working age

8. Increasing amounts available for discretionary housing payments


Local Housing Allowance (LHA) rates will be calculated on the 30th percentile of local market rents rather than the mid-point. This means that in each market area if there were 100 properties available for letting of the appropriate size, the LHA will be based on the 30th lowest rent of those 100 properties. In other words – access to the bottom 30% of the market instead of the bottom 50%.

Tenants in private rented housing who claim LHA will have access to fewer properties in their area where their full rent will be covered by their benefitTenants who cannot find a property in the first 30th percentile will have to make up the difference in rent

DWP estimates that 775,000 will be affected across the UK.DWP estimates in 81 Local Authority areas the average loss will be £10 or more per week.


Movement of low income tenants from more expensive rental market areas to cheaper ones

Households struggling to access PR accommodation.

Increased hardship, greater demand for debt counselling services, rising rent arrears

Concentration of tenants in receipt of LHA in cheaper, poorer quality PRH

Greater demand on homelessness and housing options services

Increase in temporary / B & B demand if tenants evicted are considered intentionally homeless

Greater levels of overcrowding

Increased applications to the housing register

Landlords less prepared to let to known benefit claimants

Increased applications for discretionary housing payments


Deductions from the claimant’s eligible rent where other adults with the claimant but are not part of their family for benefit purposes (e.g. adult children) who are either working or claiming in their own right are set to increase. 27% increase in April 2011 and further increases in 2012 and 2013. Tenants sharing their home with other adult(s) to contribute towards rent. N.b rates of deduction are severe where the adult occupier earns more than £200 per week.Intended as an incentive for tenants to encourage children to leave home and a disincentive to ‘voluntary sharing’.Estimates at this stage suggest that approx. 213,000 households will be affected. Of these, 160,000 will be on HB of which 142,000 will face increased deductions in both their HB and CTB


Higher demand for debt counsellingHigher demand for homelessness & housing options servicesPotential impact on temporary and/or B & B if tenants evicted are considered ‘intentionally’ homelessIncreased applications/demand from younger peopleIncreased transfer applications & bidding via CBLPrivate landlords more reluctant to let to families with older childrenIncreased applications for discretionary housing payments

Increased demand for independent housing from people who previously sharedHigher incidence of adult children being asked to leave family home due to financial strainDisagreements amongst families over liability for paymentsTenants less willing to care for elderly parents in their own homeIncreased risk of increasing arrearsNeed for additional staff/resources to collect shortfall from tenantsIncreased pressure from HB departments on landlords to conduct tenancy audits/notification of changes


April 2013 – the 30th percentile LHA rate will be set by uprating April 2012 LHA rates in line with CPI inflation: LHA rates will no longer be based on real local market rents.

Over the period 1991-2008 rent increases outstripped CPI. If this trend continues the change will mean that the purchasing power of the LHA will gradually be eroded.

The effect will be to shrink the 30% of the market that is at least theoretically available to tenants claiming benefit. In the long term there will come a point at which the cheapest property which is available in a given market area is more expensive that the full LHA rate.


By 2023, 2 bedroom houses in 34% of local authorities outside of London will be unaffordable for people claiming LHA, including working households on low incomes and those unable to work such as pensioners, carers & people with disabilities.

There is a link between areas which will become unaffordable and those regions with the biggest proportion of claimants in work and the highest rates of employment. Meanwhile regions that remain affordable in 2023 – the North East, North West, Yorkshire & Humber are those with above average rates of economic inactivity and unemployment. This suggests that benefit claimants will be ‘forced’ to live in areas which further exclude them from the labour market.

Tenants who do not (or cannot) move to a cheaper home will gradually have to make up more of the rent from other sources of income.


Movement of low income tenants from more expensive rental market areas to cheaper onesHigh cost regions accom. affordable to benefit claimants will become increasingly confined to isolated low cost ‘islands’ which may become a magnet to benefit claimants from surrounding areasHouseholds struggling to access private accom.Increased hardship, greater demand for debt & counselling services, rising arrearsConcentration of tenants in receipt of LHA in cheaper, poorer quality private rented housingGreater demand on homelessness & Housing Options servicesPotential impact upon temporary and/or BB accom. If tenants evicted are considered intentionally homelessGreater levels of overcrowdingIncreased applications to Housing registerLandlords less prepared to let to known benefit claimantsLandlords making more stringent income checks on potential tenantsIncreased applications for discretionary housing paymentsHigher demand for social housing from tenants who currently live or intended to live in PRS accommodation


Affordable Rent PoliciesAffordable Rent Policies?

• As set out in the Housing Strategy…

• For each property now offered – 40 families chasing

• By 2015 homeless demand will equal a city the size of Birmingham

• Primary legislation not required to make flexible tenancies mandatory.. Likely to be re-visited by Government in the Autumn

• New way of funding affordable housing – and will result in a new type of Housing Association

• Business drivers frame choices of the HA, not ‘need’

• Two tier system – perverse incentives

• Role of HCA as ‘economic regulator’

• View of ‘experts’ – unsustainable as it is too debt hungry


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cipfa.org.uk cipfa housing advisory network 03 february 2012 welfare reform & universal credit /...

Documents

housing slide

supported housing

discretionary housing

housing options services

age tenants

housing register landlords

private rented housing

demand slide