The future of supported housing

In my last post on the local housing allowance (LHA) cap to housing benefit in the social sector, I talked about how pensioners would lose out. My plan was to discuss supported accommodation in relation to the LHA cap but the government’s announced review of supported accommodation changes what I was intending to write.

Supported accommodation is a controversial element of the new government’s plans for social housing and for universal credit. Supported accommodation is housing provided by social sector providers – councils, housing associations, charities and the like – that includes an element of care provision in with the rent. There are various categories of supported accommodation and you may hear the term ‘specified accommodation’ or ‘exempt supported accommodation’ but for my purposes today we’ll treat them the same. The definition includes places such as hostels, sheltered housing and domestic violence refuges among others.

If a dwelling is identified by the local authority as supported or specified accommodation various important things apply.

  1. They become exempt from the benefit cap. This is crucial as rents in supported accommodation can be high and are likely to hit benefit cap levels.
  2. In some cases they are exempt from the under occupation charge (the so-called ‘bedroom tax’).
  3. They do not have their housing costs assessed under universal credit, even if universal credit is live in their area. Instead, their rent is assessed for housing benefit.
  4. Their maximum rent for housing benefit can only be limited if the local council can show that it is unreasonably high. This is very rare in practice.

It is the final point that is controversial right now, as the government is bringing in significant caps to rents in the social sector. As discussed in my previous post, social sector rents will be limited for housing benefit from April 2017. The maximum rent will be based on the lower end of the private rented sector. This is not a concern for appropriately accommodated people in mainstream social housing, as social rents are lower than market rents anyway. Rents in supported accommodation are significantly higher however, and these new LHA caps may mean many people will not be able to afford the rent if housing benefit cannot cover it.

New funding model

Last week the government announced a consultation on the way supported accommodation is funded. Until agreement is met on this new funding, the government is exempting supported accommodation from this cap. They propose that from 2019 the LHA cap will be imposed but any additional charge for housing will be met by a ring-fenced top up, paid for by the Department for Communities and Local Government. In this way, supported rents will be protected. Additionally, people in supported housing will be exempt from the condition for single people under the age of 35 to only receive housing benefit equivalent to a room in a shared property.

However, alongside these protections the government is proposing to extend the annual 1% rent decreases imposed on social housing to the supported sector. Up until now, this type of housing had been exempt from mandatory rent cuts but from April 2017 all rents will have to go down by 1% ever year for three years. A loss of £194 million in the sector.

So, rents will continue to be covered by housing benefit but will the rents be high enough to cover the costs of supported housing provision? For many providers it may be too great a cost to bear.