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Home Sweet Home 2: Housing supply and policy reform

In July, I wrote a blog exploring the future of housing for older people. Housing demand outstrips supply in all sectors, but a lack of appropriate housing for older people has a knock-on effect for other generations. Without viable and attractive alternatives, the opportunities for older people to ‘downsize’ from their under-occupied homes and free up housing for younger generations will become increasingly rare. Reform of Housing Benefit and social housing rents could deepen the disparity between the supply and demand for housing, not just for older people. Work and Pensions Secretary Damian Green’s recent statement on the changes to Housing Benefit and social housing rents has been met with concern by housing associations, providers and third sector organisations representing older people about the uncertain future of supported housing.

This statement provided an update on two main changes to the funding of social housing announced last year, and will have serious repercussions for the sector. First, in the Welfare Reform and Work Act 2016 it was announced that social housing landlords would be required to reduce their rents by 1% each year from April 2016 for four years. Owing to concerns raised by housing associations and housing providers, the introduction of the reduction to supported housing was delayed. In addition, in the Spending Review and Autumn Statement 2015, the Chancellor announced the intention to introduce a cap on the amount of rent that Housing Benefit will cover in the social rented sector at the relevant Local Housing Allowance level (the rate paid to most private renters on Housing Benefit). The housing sector called for supported housing to be exempt from these measures owing to its high costs in part due to the need for units to be purpose-built, located in more expensive areas near amenities, subject to more wear-and-tear and with a need for additional staffing resources[i].

However, in his statement Damian Green announced that the Housing Benefit cap would be applied from 2019/20 and local, ring-fenced funds will cover any additional costs of supported housing. This change also goes beyond accommodation provided by local housing associations as in future those in housing provided by registered providers or social landlords will receive Housing Benefit up to the Local Housing Allowance rate and that certain service charges would become ineligible. Social landlord rents are currently regulated, but additional service charges are not. In future, social landlords will need to apply to a discretionary fund for any additional costs, and the rationale behind this reform is “to ensure these charges are limited to genuine housing related costs[ii]. In his statement, Green also announced that as of April 2017, the 1% decrease in rents would also apply to supported housing.

These changes, it is argued, will lead to a withdrawal from the sector of many social landlords and housing providers, leading in turn to fewer housing options for older people. The National Housing Federation estimates the 1% reduction in rents will see a loss to the sector of £194 million over the three year period and one provider, Anchor, has estimated that the change in Housing Benefit will result in a £13 million hole in its budget. It will also put significant pressure on local housing authorities, who will struggle to invest in supported housing when there is potential uncertainty around the recouping of running costs from the discretionary fund. There is concerns that the language of Green’s statement implies the fund is temporary and transitional: “In recognition of the need to manage the transition to a new funding regime carefully, we will ring-fence the top-up fund to ensure it continues to support vulnerable people” (emphasis added). The size of the fund, how it will be allocated, whether it will take into account future need and the ring-fencing process have not yet been confirmed.

This uncertainty at a time when investment in supported housing is desperately needed will undoubtedly make closing the gap in demand for specialist housing for older people, currently estimated at 16,000 more specialist homes a year up to the year 2030, more difficult.  The cost of not investing in this type of accommodation is also worrying, with the National Housing Federation arguing supported housing delivers an average net saving of £940 per resident per year when it is compared to hospital and residential care. The proposed reform of Housing Benefit and social housing rents will likely see savings for these parts of the welfare state, but could potentially push the cost of these reforms to other parts of the already over-stretched health and social care system.

[i] Wilson (2016). Paying for supported housing, Briefing Paper Number 6080, 28 September 2016, London: House of Commons Library.

[ii] DWP. (2011). Housing Benefit Reform – Supported Housing, Cm 8152, July 2011, London: Department of Work and Pensions.  

About the Author:

Dr Kate Hamblin is a Senior Research Fellow at the Oxford Institute of Population Ageing. Kate is currently working on a follow-on project examining self-employment for older workers as well as a further collaboration with CIRCLE on a piece of research commissioned by SENSE (the deaf-blind charity) to explore telecare use by individuals with dual-sensory impairment. She is also engaged in a John Fell Fund project exploring the outcomes of the Museum of Oxford’s reminiscence programme and a study examining the work and retirement aspirations of older self-employed people.

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