Yesterday the Government announced a temporary halt to changes on the Local Housing Allowance for supported housing. Yet fundamental problems remains – let me explain why.

Currently the Local Housing Allowance limits housing benefit for private rented tenancies at 30% of the local market rent. The Government is proposing to extend this to social housing from April 2018 for all new tenancies signed from April 2016. In addition Local Housing Allowance rates will be frozen from 2016 to 2020 irrespective of any market changes. The impact will be to reduce benefit payments for new social housing tenants and income for Housing Associations.

However there is a profound knock on for supported, sheltered and extra care housing. Costs in such housing are higher due to increased build, management and maintenance costs. There have already been substantial reductions in future income due to the 1% rent cut for the next four years and cuts in Supporting People funding.

There are two related impacts. The PlaceShapers Group estimate that the Local Housing Allowance changes will leave a £400 million gap for existing providers. Combined with other changes this may make supported housing unviable resulting in providers withdrawing from the market.

Secondly faced with uncertain and unviable income streams providers will decide to place on hold or cancel projects for vulnerable people. There is already evidence that this is happening.

In both cases valuable support for vulnerable people is at risk of being withdrawn with consequences both for their well-being and the impact on other services as that support is withdrawn.

The National Housing Federation has been campaigning against this change with some degree of success. There have already been concessions from the Government with the extension of Discretionary Housing Payment (already under pressure from the Bedroom Tax) to cover shortfall. They also agreed to hold a strategic review into specialist provision due to report this month. Yesterday’s announcement goes further in delaying the start date for a year whilst that review is taking place (although implementation date remains the same).

Although welcome this means that Housing Associations considering new build supported housing will still be faced with uncertainty about future income and with that uncertainty will be reluctant or unwilling to take such risk.

Hopefully this uncertainty will be ended soon with an agreement on future funding that will enable existing and proposed supported housing to prosper. Otherwise the future of supported housing looks bleak.

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