Letter to MPs - The real impact of LHA on vulnerable people

In light of proposed changes to Local Housing Allowance (LHA), Chief Executive Philippa Jones has issued a letter to MPs urging them to discuss the future funding model for supported housing sector. 

Following the Chancellor’s announcement in the Autumn Statement, I am writing to personally urge you to consider the implications of the Local Housing Allowance cap being applied to vulnerable social housing tenants living in supported housing.

This is a new issue for many MPs and so to give you some background: As part of the spending review the Chancellor outlined plans to cap the amount of rent that Housing Benefit (HB) will cover in the social sector to the relevant Local Housing Allowance (LHA) which is the rate paid to private renters on Housing Benefit. We understand that the Government intends to apply the LHA to supported and sheltered accommodation, whilst putting aside some money for local authority Discretionary Housing Payments to enable top ups between the LHA rate and the actual rent and service charge.

The impact of a LHA cap on the Housing Benefit paid to vulnerable citizens living in supported accommodation is immense. Here’s how it will affect our customers:

• If LHA applies to supported housing in its entirety, rent plus HB eligible service charge will mean that many of our supported and sheltered rents will be over the LHA cap. Of our 2,226 supported and sheltered homes, around 1,300 of these (58%) exceed the current LHA limit

• With a much quicker turnover in supported housing, we would quickly see the LHA cap applied to all of these homes, making many existing schemes unviable in the future. This would remove appropriate support options for homeless people, young people, young families, people with mental health issues or with learning disabilities amongst others. Without our supported housing provision many of these individuals will see a deterioration in their circumstances and may well end up needing acute mental health services, A&E, hospital admission or residential care. There is also an increased likelihood that customers will become embroiled in the criminal justice system and/ or that they will become homeless

• For sheltered housing, the impact will also be considerable. A significant number of our sheltered homes are two bedrooms allowing for the second bedroom to be used for medical equipment or to enable a partner with ill health or a disability to sleep in a separate room. Whilst older people have been exempt from under-occupancy rules, under the LHA cap, older people will only be entitled to a one bed home and we will no longer be able to allocate our two bed homes. In some instances, the rents on our one bed homes exceed the cap, meaning that older people would need to pay the difference out of their pension. This will reduce the number of homes available to older people and ultimately, place the viability of the whole scheme at risk. 

• In terms of new supported housing developments - Bromford has achieved what most in the sector thought impossible. We have continued to develop specialist support and extra care schemes without capital grant. However, to do this we need higher revenue charges and if we cannot demonstrate where these will come from in the future, the Board will not support further borrowing for such schemes. 

Discretionary Housing Payments will not mitigate the risk. Although, on the face of it, the principle of using Discretionary Housing Payments to top up the difference between LHA and actual rents in supported housing sounds sensible, it is not a long-term solution.

Discretionary Housing Payments (DHP) are already stretched, supporting those who are affected by the under-occupancy charge (bedroom tax) and the benefit cap, reducing further in April 2016. Despite assurances from Lord Freud that the DHP budget is to receive an additional £70m across 2018/19 and 2019/20, it is likely to be a temporary increase. Our analysis of DHP to support welfare reform over the last three years shows that although there was an increase for a two-year period, year three saw an overall reduction in the budget of around £3.3m, highlighting that any increase will only be a temporary measure. 

In addition, relying on DHP would also bring a huge amount of uncertainty to supported housing developers. This in turn would reduce their capacity to build future developments in an already stretched market.

Research by Sitra for the National Housing Federation has shown that there is already a shortfall of 15,600 available places in supported housing for people of working age, representing over 14% of existing supply. Based on current trends, in four years this is expected to grow to a shortfall of almost 30,000 available places.  The cost of providing supported housing is higher than providing general needs housing, and operating margins for these schemes are already very slim.

With this in mind, we would urge you to ask the Minster to set out a timetable for identifying a long-term secure funding model for the supported housing sector.

The LHA cap was announced in the Autumn Statement with no consultation and with no impact assessment, so the implications on vulnerable citizens and the resulting reduction in supported and sheltered homes was not formally considered. Now that this issue has been highlighted by providers like us and by the National Housing Federation we are asking the Government to address it fully and as quickly as possible.

Supported housing promotes health, independence, choice and control, preventing the escalation of need. The outcomes achieved and the benefits to the individual, their families and society as a whole are well documented. Our evaluation of the social value created through Bromford’s supported housing is documented in our latest Social Value Report www.bromford.co.uk/socialvalue

We are very concerned that any reduction in supported accommodation will not only impact on individuals, but will also lead to increased demand on statutory services from health and social care services through to homelessness services. For our older customers, people with learning disabilities or long term mental health needs the alternative may be a considerably more expensive residential or care home.

It’s important to act now. Although this has yet to reach The Commons, the long-lead times for developing new schemes for supported housing mean that we need certainty now. Every week’s delay will mean more uncertainty and will lead to schemes being delayed or cancelled. The earliest possible clarity from the Government is needed to avoid a potentially catastrophic impact on supported housing customers. 

We ask you to support us in ensuring the LHA cap does not have a hugely detrimental impact on current and future vulnerable citizens by limiting it to working age tenants in general needs housing. We would also like to see provision for some vulnerable younger people to be excluded from the under 35’s ‘shared room rate’. We typically house these customers in one-bedroom homes, so the impact will be much higher.

If there are any matters relating to this, the impact of welfare reform, housing policy, or if you and/or your caseworker would like some additional support to help gain a greater understanding of the housing sector, we would be more than happy to help. Please do contact me

Yours sincerely

Philippa Jones

Chief Executive

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