Benefit cap to halt development of family homes, housing groups warn

Published by 24publishing for 24dash.com in Housing

Nine of the UK’s biggest housing associations in the South East have warned that the £500 a week benefits cap could see them pull out of building family-sized homes.

This is because the cap – which comes in from 2013 – makes the properties unaffordable under the Government’s Affordable Rent product, which allows providers to increase rents up to 80 percent of the market rate in order to fund new homes.

CASE – the research group made up of landlords including L&Q, Moat, Sovereign and the Hyde Group – also warns that, over time, inflation will cause rents on smaller properties to breach the cap if it’s not increased in-line with inflation each year.

They are calling on the Government to relax the cap for larger homes and to index the benefits cap to inflation.

The report says: “As a snapshot of what will happen once the cap is put in place 100 percent of four bedroom properties will become unaffordable, and therefore, they will not be considered in future development plans.

“Likewise, CASE members are reviewing whether to continue building three bedroom properties, given that they already threaten the cap and will exceed it if the cap does not rise with inflation."

The report also calls for direct payments to tenants to be scrapped and backs a House of Lords amendment exempting tenants with one spare room from housing benefit cuts from 2013.

This month the Government’s benefit cap plans were defeated in the House of Lords. An amendment to exempt child benefit from the £26,000-a-year cap was voted for in favour by peers 252 to 237.

The Government has said that it will bid to overturn any defeats in the Lords when the legislation returns to the commons this week.

Research published by the Department for Work and Pensions put the number of claimants who would see benefit cuts when the cap was brought in at 67,000 – 44 percent of which are in the social sector. More than half those affected are in London. Families face losing on average £83 a week.