Housing reforms: an update

Rachael Orr, Shelter

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

Impact of the proposed changes to LHA on the affordability of London neighbourhoods, 2010

Impact of the proposed changes to LHA on the affordability of London neighbourhoods, 2011

Impact of the proposed changes to LHA on the affordability of London neighbourhoods, 2016

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