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Welfare cap could make housing association homes 'unaffordable'

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Welfare cap could make housing association homes 'unaffordable'

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Published by Jon Land for 24dash.com in Housing

Welfare cap could make housing association homes 'unaffordable' Welfare cap could make housing association homes 'unaffordable'

The head of one of the UK’s largest housing providers has said the welfare cap outlined in today’s Budget could see housing association homes become unaffordable to people on the lowest incomes.

Mark Henderson, Home Group chief executive, claimed the welfare cap outlined by Chancellor George Osborne could see increasing numbers of people struggle to keep a roof above their heads as housing benefit could fail to keep up with minimum increases in housing costs.

The chancellor outlined a welfare cap of £119bn in 2015/16 which in future rises will be limited to whichever is the lower between the Consumer Price Index or a rise of 1%.

With government setting annual affordable rent increases at CPI +1%, Henderson fears those on the lowest incomes will see an ever widening gap in their incomes and the cost of their rent.

He said: “At current rates this welfare cap is a cut to the incomes of some of the most vulnerable people in society. The government sets yearly affordable rent increases at CPI +1%.

“Many people who rely on affordable housing could see an increasing gap year on year between their housing benefit and the cost of their homes. The danger is that affordable housing will no longer be affordable to a significant number.”

However Henderson highlighted the Budget came just months after the Autumn Statement which in which the government outlined a commitment to unlock land and provide a £1bn worth of loan guarantees to kick start housing.

But measures announced today failed to address how the 245,000 new homes needed each year to tackle the housing crisis would be built.

Pledges to extend help to buy to the end of the decade, provide £150m to self build enthusiasts and provide 200,000 new homes by the end of the Parliament do not go far enough.

Henderson said: “We’ve previously warned the risk Help to Buy brings in creating another housing bubble by increasing demand without increasing supply. We’re pleased the Chancellor has instructed the Office of Budget Responsibility to monitor the market.

“The housing crisis is not going to be solved by helping a generation of Grand Design self builders. Homes must be built at scale and efforts focused on supply rather than demand. We look forward to seeing the publication of the garden city prospectus which will hopefully outline where and how the homes we need will be built.”

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