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A step into the unknown - the impact of housing benefit reforms

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A step into the unknown - the impact of housing benefit reforms

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Published by Ellie Warfield for 24dash.com in Housing

A step into the unknown - the impact of housing benefit reforms A step into the unknown - the impact of housing benefit reforms

Changes to housing benefit and the shared room rate have been presented as necessary measures at a time of cutbacks in public expenditure. But those working with the homeless are in universal agreement that they represent a false economy with potentially disastrous consequences for those on the fringes of society.

Paul Golden talks to some of the country’s leading homelessness charities to assess the impact of the Government’s policies and finds out why a proposal to house homeless people in private sector accommodation fills them with dread.

“Over the next three years, organisations like ours will be needed more than they have been at any time in the last 20 years.”

This view, expressed by Howard Sinclair, chief executive of Broadway, is typical among homelessness charities.

Government reforms that will see widespread cuts to housing benefit and the loss of security for vulnerable people are threatening to destabilise communities and create repeat cycles of homelessness.

Sinclair says the full impact of the legislative changes will not be immediately evident but fears a steady rise in homelessness as people lose their tenancies.

To him, the financial argument for withdrawing funding simply doesn’t add up. “Increasing the number of homeless will not save money - these changes are just about moving responsibility from one budget heading to another,” he said.

“I could envisage government having to invest more money in helping people on the very margins because we will see an excess of poverty and homelessness.

Shelter is anticipating an increase in enquiries over the next six months as tenants receive communications from local authorities and is conscious of making sure that these people are getting the right advice. London campaigns manager, Rachael Orr explains: “If legal aid was no longer available to people appealing housing benefit decisions, there would be an impact on all areas of advice. We see phone advice as important but it should not replace face to face assistance for more vulnerable people.”

The organisation is also concerned about the level of interaction between welfare and housing policy. “There are a lot of unknowns – for example, rents could fall but no one knows if they will and by how much,” says Orr.

“There is real concern that landlords might be encouraged to convert larger properties that are needed for family housing into multi-tenancy units or that tenants might be forced to accept lower quality housing.”

Shelter believes the number of people approaching councils in many parts of London has already increased significantly and refers to estimates that more than 80,000 households might have to move as a result of the changes. Orr warns that boroughs with higher levels of affordable housing will face issues around availability of services and support as people move into these areas.

“The range of cuts is concerning and we are particularly concerned about changes to the shared accommodation rate, which will affect 65,000 people by an average of £41 per week from January 2012,” says Katharine Sacks-Jones, head of policy at Crisis. “The majority of these tenants will have to move. There is a real risk that some people will not be able to find sustainable shared accommodation and will end up homeless and we are also concerned that rough sleeping will increase again.”

The discretionary housing payment budget has been increased, but Sacks-Jones describes the increase as “insignificant” in the context of the scale of the spending cuts. “We work with agencies who help people find private rented accommodation and good agencies will provide as much notice as possible for people who may need to move. However, demand for private rental accommodation is increasing and we are already hearing that landlords are not taking on younger claimants because they know they face a benefit reduction.”

Crisis is also concerned about discharge of the homeless duty, stating that placing people in private sector housing with perhaps a one-year tenancy will not provide the stability they need and will lead to people losing their homes again.

Jacqui McCluskey, director of policy & knowledge at Homeless Link expressed concern that these changes are being introduced in quick order and in isolation. “There has been no overall view taken of the cumulative effect of the changes, although the government has agreed to review their impact, possibly at the end of next year.”

She believes the monitoring role played by Homeless Link will become more important as a result of changes to housing allowances and adds that while those working with the homeless have always been good at identifying unmet needs and responding to them, the sector is already at full capacity and it will be hard to accommodate significant numbers of new homeless.

The change to the shared room rate is likely to lead to landlords exiting the market at a time when there is going to be increased demand for shared properties, even though there is already evidence of undersupply for people under 25, believes Paul Marriott, chief executive Depaul UK.

“As a consequence it will be more difficult for young people to find their own affordable accommodation,” he explains. “We will therefore find it more difficult to move young people on from our supported accommodation projects, the turnover in our hostels will decrease and so it is more likely that young people will have to sleep rough.”

Marriott says Boris Johnson’s ambition to end street homelessness is to be applauded and that progress has been made. However, he adds that the strategy does not take account of the sensitivities of dealing with young homeless people, either nationally or in London. “Rough sleeping among young people is different from among the older homeless population and, of course, young people experience particular vulnerability.”

Likely inability to move people from hostels to permanent accommodation is also a concern for St Mungo’s executive director of operations, Mike McCall. Where the organisation is able to move people on, they may have to move further out of the area and lose their connection to support services that have been helpful to them, he adds.

McCall is keen to see more use of discretion and more protected groups. “For example, people who have been treated successfully for substance abuse should not be forced to live with others, if being on their own is important to them keeping their recovery going.”

The results for homeless people finding accommodation through the private rented sector are “pretty mixed”, he concludes. “They have more debt and can be less likely to get work. There are some good private sector landlords but it is not a silver bullet, which is why we set up our peer advice link service, staffed by clients who have experienced homelessness themselves and offer help and advice to people moving into their own places.”

Balbir Chatrik, director of policy at Centrepoint, says providing new claimants in the private rented sector with enough housing benefit to afford the bottom 30% of properties rather than the bottom 50% is making it harder for people to find somewhere they can afford and that the problem could be compounded by landlords refusing to rent to those on housing benefit.

Centrepoint is concerned that changes to the shared room rate will make young people appear less attractive to landlords due to their lack of experience of managing a tenancy. “Local authorities need to work with landlords to encourage them to offer decent properties at rates housing benefit claimants can afford. This could be achieved through greater provision of rent deposit schemes and social letting agencies that help match up people with suitable private tenancies.”

Chatrik is also concerned that the Localism Bill proposal to house people in private sector housing is unlikely to reduce homelessness rates in the long term.

“Many homeless people are already re-housed into private tenancies, but unfortunately recent research shows they tend to have much poorer outcomes than those resettled into social housing. The FOR-HOME study published by the University of Sheffield earlier this year showed that tenants in the private rented sector were more than twice as likely as social tenants to end up back in hostels or on the streets after 15 to 18 months.”

There will not be an immediate rise in the number of people sleeping rough as a result of the housing benefit cap but already marginalised individuals will be at greater risk of street homelessness, according to Jeremy Swain, chief executive of Thames Reach.

“The overall housing benefit cap on different sized properties will probably particularly affect families, especially in more affluent areas such as central London where rents are higher. Some may be forced to move to areas with lower rents, below the £400 weekly cap. Individuals will be hit by these caps too with rents for many one bedroom flats in London exceeding the £250 limit. The combination of this cap along with the lowering of the percentile rates means it won’t just be people in central London who will be affected.”

Swain says the changes are already beginning to have an impact on how landlords act. “Already, our schemes that work to help people find private sector rented accommodation are experiencing landlords refusing to take people under 34 on the grounds that though they are eligible for the one-bed rate now, this will not be the case next year.”

The view from the other side

More than 50 per cent of private landlords are planning to reduce the number of homes they let to tenants on housing benefits, according to research by the National Landlords Association (NLA).

The NLA survey questioned landlords about Local Housing Allowance (LHA), with 58 per cent saying they would have to cut the number of properties they let to benefit recipients. In total, 90 per cent of these landlords plan to do so in the next 18 months; with one third stating they would be reducing their LHA properties immediately.

The news will be a bitter blow for the Government which expects private sector rents to fall on the back of cuts to housing benefit.

More than 80 per cent of landlords expressed concern about the reduction of LHA rates from the average market rent to the bottom 30 per cent.  The same number of landlords were also worried about future LHA increases being linked to the Consumer Price Index (CPI) rather than true market rents.

The survey found that 90 per cent of landlords stated that they cannot afford to reduce their rents to absorb changes to LHA. The large majority of landlords are faced with mortgage repayments and rising running costs.

David Salusbury, Chairman, National Landlords Association, commented: “These findings by the National Landlords Association are concerning as they indicate that cuts to LHA benefits are forcing landlords out of this part of the rental market.

“The private rented sector is playing an increasingly important role in providing accommodation to housing benefit recipients in the UK. The Government is implementing cuts which, this survey tells us, is likely to lead to an increasing number of people struggling to pay their rent.

“The NLA believes there is a risk that the Government’s policies will result in fewer affordable rental properties available to vulnerable families across the UK, especially as the number of people claiming benefits continues to rise.  Benefit payments must ensure that LHA tenants are not left at risk and that landlords providing this much-needed housing can cover their costs.”

This feature originally appeared in the July edition of 24housing magazine.

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