Changes to funding for supported housing from April 2019
At the end of last year, the Government announced its consultation on changes to funding for supported housing. Whilst we know the Government is committed to supported housing, there is a concern that the Government's commitment might be tested to its limits in a time of economic uncertainty.
If the changes are not delivered in a way which gives confidence to the sector it will be a huge negative in terms of growth and could lead to the closure of existing services.
Currently, Housing Benefit covers all housing costs for tenants who are eligible and have the right kind of landlord. The new model will introduce a cap above which an application needs to be made for top up funding. The cap is to be set at LHA levels in the same way as for private sector tenants currently. An assessment has been carried out to determine how much Housing Benefit goes towards supported housing and the intention is to put the difference between that and the cap in a ring-fenced fund to be administered by local authorities.
These changes will affect both specialist supported housing providers and housing providers generally, where their rents are above LHA levels; those levels being based on the type of accommodation and its location.
We have already seen the sector react with concern to the proposed changes, particularly in terms of how local authorities will administer the top up funding. The uncertainty surrounding the income streams which can be generated by supported housing developments has caused some providers to reconsider the merits of their current building plans and in some cases, to halt proposed developments. For instance, Hightown Housing Association in Hertfordshire has recently abandoned plans for a supported housing scheme in Aylesbury because of the uncertainty in the sector. The Anchor Trust, Bromford Group, Magenta Living, Hanover Housing Association and Housing & Care 21 have all been vocal in their belief that the proposed changes could cause the sector to grind to halt in terms of new development.
Supported housing providers have been quick to point out that 'downsizing' and matching occupiers with homes of an appropriate size for their needs was a feature of the recent White Paper and yet the effect of the LHA cap could be to reduce the number of properties available for those downsizing, particularly the elderly.
This is the first stage of the consultation so we will keep an eye on developments over the coming months. The Green Paper is due to be published this Spring but the local authority funding allocations won't be known until the Autumn.