Housing reforms: an update

1. Housing reforms: an update Rachael Orr, Shelter

2. Proposed changes to housing, housing advice and housing benefit since June 2010 Removal of security of tenure for council tenants, introduce new flexible tenancies Reform of Housing Revenue Account allowing councils to borrow money to build homes 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 Introduction of Universal Credit Remove ring fence from Supporting People, PRS renewal funds Abolition of regional spatial strategies Increasing deductions for non-dependants living with HB claimants Setting the maximum LHA paid at the 30th percentile rather than the median 80% affordable rent product to be introduced Cut to capital spend on housing of 60% Review of allocations policies Wholesalechanges to Legal Aid, including removal of legal aid for Welfare Reform cases Discharge of homelessness duty into the PRS SRR raised - paid to everyone under 25 to everyone under 35 Limiting working age HB entitlement to reflect household size in the social rented sector Wholesale changes to planning system Capping total benefits for households out of work or working up to 16 hours a week to £26,000 per year Maximum rate of HB linked with Consumer Prices Index (CPI)

3. 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

4. Welfare reform policies • First wave of benefit reforms introduced on Friday 1st April for new claimants – existing claimants have 9 months transitional protection until they are affected. These are: • Ending 5-bed rate, capping total LHA paid • Move to the 30th percentile • Increasing non-dependent deductions • Removing £15 excess paid to some claimants • As a result of these reforms: • 23% of private tenants in London stand to lose over £20 per week in LHA • Up 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

5. Welfare Reform Bill • 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 • The CPI link • The ‘shopping basket’ used to calculate CPI places more weight on restaurant & café costs than it does rent. • 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. 30% 70% 1997/8 – CPI Rents 2007/8

6. 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

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

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

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

10. Interactions and the impacts on Housing Supply • 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 • Impact on Private Rented sector • Fewer landlords willing to let to LHA claimants BUT • Households finding owner occupation unsustainable turning to the PRS • Households unable to access social housing turning to the PRS • Social Sector • Increased demand as the PRS shrinks for those on benefit • Increased demand for temporary accommodation

11. A more detailed look at some other changes – and some questions…. • 2012 – Raising single room rent or shared room rent from 25 to 35 • This will effect all private sector claimants ie HB and LHA cases • The possible shortfalls in London range from £70 to £140 a week • This will force people under the age of 35 to share/sofa surf • Are there enough HMOs ? Do we want any more? Will • there be any DHP for this level of shortfall? • 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?

12. 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