23rd November, 2016
Yesterday’s bulletin explained how DWP had kicked off its Supported Accommodation consultation exercise. I also mentioned how plans to apply the Shared Accommodation Rate (SAR) of LHA to single, under 35’s, had been postponed by 1 year to April, 2019. A good news story, for a change!
What I didn’t mention, as I was unsure at that time, was the Ministerial Statements seemed to imply LHA rates, from April 2019, would apply to ALL Social Landlord tenancies. As this was significantly different to the September statement, I decided to write to DWP hierarchy, seeking some clarity, as I didn’t wish to raise any unnecessary alarm. The bad news is, DWP yesterday morning responded:
“I can confirm that the LHA rates will apply to all Universal Credit tenants.”
So, from April 2019 anyone claiming Universal Credit with “housing costs” will be assessed on how many bedrooms they and and their family require, up to no more than 4 bedrooms. LHA rates were originally assessed by the Rent Officer Service examining rents in the “Broad Rental Market Area (BRMA)” and at the 30th percentile, or lower third of market rents. However, the Rent Officer’s figures in recent years have also been capped by Government policy. Firstly, a 1% ceiling was applied. More recently, LHA rates have been frozen for 4 years, leading to many PRS landlords removing their properties from the LHA market.
At a stroke, the Goverment has found a vehicle for eliminating the much criticised “Bedroom Tax” with its 14% & 25% penalties, and, at the same time, provided itself with a formula to completely control any future expenditure arising from the “housing element” of Universal Credit. Short term, this probably won’t have much impact on rental income, as RSL rents tend to be pitched at levels lower than LHA but if the Goverment persists with its rent capping, at some point RSL rents will exceed the LHA level, so will be capped, requiring top-ups from tenants. If the experience of the LHA market is anything to go by, this will lead to a hike in rent arrears, as tenants struggle to meet the shortfall.
DWP also responded to some supplementary questions I raised in relation to under 35 exemptions and the position of 18-21 year olds in relation to Housing Benefit. The response stated:
“The exemptions that apply to the Shared Accommodation Rate within the private rented sector (and which we would expect to replicate in the social rented sector) are:
- those in receipt of the severe disability premium;
- those who have an extra bedroom for a non-resident carer providing overnight care;
- care leavers up to the age of 22;
- foster carers;
- those who have spent at least three months – which do not need to have been continuous – in a homeless hostel/hostels specialising in rehabilitating and resettling within the community (those aged 25-34 only); and
- ex-offenders who present a risk of serious harm to the public and are subject to active multi-agency risk management under the Multi Agency Public Protection Arrangements (MAPPA) to be rehabilitated back into the community (those aged 25-34 only).
We also confirmed in September that when the LHA rates are extended to the social rented sector (2019/20), those living in supported housing (in both the private and social rented sectors) will be exempt from the Shared Accommodation Rate. In addition, Discretionary Housing Payments will be available for those who are vulnerable or who face difficult situations.”
Lastly, on the position of the 18-21 year olds they said:
“On the 18-21 year olds question, from 1 April next year the Government is removing automatic entitlement to the housing element in UC Full Service for some 18-21 year-olds. The policy will only affect the UC Full Service – it will not affect Housing Benefit claimants or those on the UC Live Service. In addition, the Government has always been clear that this policy will have exemptions to make sure the most vulnerable continue to have the housing support they need. We expect to be in a position to share the list of exemptions in the next two weeks.” I’ll update you when I receive further information on this topic.
If you require any further information on this or any other welfare reform topic please e-mail firstname.lastname@example.org or phone 07733 080 389.
UC Advice & Advocacy Ltd