12,000 younger Scots face up to £8.6m rent shortfall from LHA cap, new report confirms
Around 12,000 mainstream social tenants across Scotland aged under 35 could collectively face an annual rent affordability gap of between £5.3 million and £8.6 million when a UK Government cap on housing benefit (or the housing element of Universal Credit) for social housing tenants at Local Housing Allowance (LHA) rates comes into force in April 2019.
This is a key finding of new research commissioned by the Chartered Institute of Housing in Scotland in partnership with the Scottish Government and published today (11th October 2017). The research was conducted by the Indigo House Group.
The cities of Edinburgh and Glasgow are likely to be the most severely affected by the policy with 27% of all of Scotland’s single Housing Benefit claimants aged under 35 living in these two cities, equivalent to more than 6,500 people. The total weekly shortfall in Edinburgh is expected to be £19,600 and in Glasgow, those affected face a collective weekly shortfall of £18,800.
Analysis of average social sector rents shows the potential financial impact for individuals varies considerably depending on the size of home they are living in and how social rents compare with LHA rates for the area. Across Scotland, single tenants under the age of 35 living in a one bedroom home and affected by the cap will face an average shortfall in rent of £6.60 per week. The highest shortfall for one bedroom homes will be experienced in Edinburgh at £22.09 per week. Meanwhile, there are eight areas showing no shortfalls between the average local one bedroom social rents and the ‘cap’ LHA rate.
Since October 2015, the UK Government has made various proposals and amendments to cap Housing Benefit or the housing element of Universal Credit for social housing tenants at LHA rates, including for those living in supported or temporary accommodation. The proposals are intended to bring payments for social housing tenants in line with those living in the private rented sector. Legislation to implement these proposals has yet to be introduced. However, as the proposals currently stand, single people under 35 years of age will see their allowance capped at the Shared Accommodation Rate (SAR).
An upper estimate of the impact of the policy suggests that around 14,400 tenants could face a collective shortfall of £8.6 million annually. These figures were arrived at by calculating the difference between average rents by property size submitted annually to the Scottish Housing Regulator by individual social landlords, comparing this with the SAR in the corresponding local authority area and multiplying this by the estimated total number of social tenants aged under 35 living in that area.
An alternative method using Department for Work and Pensions (DWP) figures was also used. By excluding an estimated 2,500 Housing Benefit claimants aged under 35 who are thought to live in temporary or supported accommodation and may therefore benefit from a partial or total exemption from the proposed LHA cap, the research estimates that the LHA cap would still hit around 12,000 social tenants living in mainstream accommodation with a collective rent shortfall of £5.3 million per year.
Although it is anticipated that some tenants living in specialist and temporary accommodation will be protected from the cap, it is not yet clear what exemptions will be made or how much funding will be available to plug this gap.
Minister for Housing Kevin Stewart said:
“This report demonstrates the impact that the next round of harsh welfare cuts from the UK Government is having – this time on younger, single people. These cuts are expected to remove up to £8.6million in welfare from a group of young people who rely on these benefits due to low incomes. There are few options for social landlords or tenants to mitigate the impact, especially as those affected will largely already be in some of the cheapest accommodation available.
“We share the concerns that so many have around the potential impact of these cuts. I will be writing to David Gauke MP to make sure that he takes account of this report and calling on him to use the Budget to announce he should not apply the shared accommodation rate in the social sector.”
CIH Scotland Policy and Practice Manager Ashley Campbell said:
“The results of this research confirm the damaging impact the UK Government’s plans to cap housing benefit at LHA rates will have on younger social tenants in Scotland. That impact goes far beyond the immediate financial effect. Many of those 12,000 affected face the prospect of falling into rent arrears and, in the worst cases, losing their home and being made homeless. In many cases, local authorities will face real challenges with rehousing those now unable to afford their rent because we simply do not have enough appropriate housing available to do so.”
Chair of CIH Scotland Amanda Britain commented:
“We plan to make the UK Government aware of the key findings of this research and the full scale of the negative impact the LHA cap will have on social tenants aged under 35. We are urging the Government to rethink its entire approach and to take active steps to prevent what will otherwise be a disaster waiting to happen in April 2019.”
Notes to Editors
1. The Chartered Institute of Housing (CIH) is the independent voice for housing and the home of professional standards. Our goal is simple – to provide housing professionals with the advice, support and knowledge they need to be brilliant. CIH is a registered charity and not-for-profit organisation. This means that the money we make is put back into the organisation and funds the activities we carry out to support the housing sector. We have a diverse membership of people who work in both the public and private sectors, in 20 countries on five continents across the world. Further information is available at www.cih.org
2. A final research report entitled “The introduction of the LHA cap to the social rented sector: impact on young people in Scotland” was officially launched at a special event at the Teacher Building in Glasgow on Wednesday, 11th October 2017. The text of the full report can be accessed via the following weblink:
3. For further information, please contact: Alex Bruce at Orbit Communications on email@example.com or 07747 636504.