All ‘social’ landlords to abandon all business models due to radical HB changes

The misnamed ‘welfare reforms’ when they are correctly housing benefit changes has, at long last, finally seen social landlords have to view them from how they affect the social tenant. The proverbial is so going to hit the fan that the term social housing becomes the biggest misnomer of the lot as I briefly explain below.

The devastation the reduced overall benefit cap policy and the LHA maxima cap policy will give has forced this issue upon them.  These two policies manifest in radical change for social landlords way in excess of the bedroom tax for example as they affect ALL housing benefit recipients not just the 13% of them who allegedly under occupy in the bedroom tax.

The OBC hits the 74% of all social housing HB tenants who are not pensioners and the LHA maxima cap affects 100% of housing benefit recipients as it includes pensioners – and 77% of social tenants receive housing benefit.

As such the OBC and the LHA maxima cap policies are significantly more radical in their impact for social landlords … who now need to respond with radical changes of their own that are forced upon them by these two policies.

  • Bedroom Tax = 13% of 77% = affects 10% of all social housing tenants
  • Benefit Cap = 74% of 747% on HB = 57% of all social housing tenants
  • LHA maxima cap = 100% of 77% = 77% of all social housing tenants
  • SAR applying to social tenants = 4% of all social housing tenants affected

Those simple figures show the radical extent of the overall benefit cap and especially the LHA maxima cap in comparison to the welfare reforms that have gone before such as the bedroom tax.  This is a whole new ball game for all social landlords and it is just dawning on them precisely what this will all mean.

Crudely the Benefit Cap has almost 6 ties more impact than the bedroom tax and the LHA maxima cap has almost 8 times the impact as the bedroom tax.

The Benefit Cap means a fully occupied 3 bed SRS property will be hit by an average £76 per week HB cut when the under occupied bedroom tax 3 bed attract a HB cut averaging £15 per week.  The two policies thus clash and work in directly opposite ways … and reveals both policies to be ideological back of a fag packet ones that are totally uncoordinated.

The LHA maxima cap means the the majority of sheltered housing – the category 1 type that is not supported but general needs housing – is not financially viable and will close, definitively will close I repeat.

The SAR applying to social housing tenants by contrast only affects 4% at most of social housing tenants.  (The under 35 on HB is 19% of SRS households of which 28% are childless and 77% presumably on HB – 4.1%)

Yet bizarrely it is the only aspect of general needs social housing that the NHF has challenged openly and they have not stated how the LHA maxima cap affects the majority of sheltered housing which is also correctly general needs housing as it is neither specified accommodation or exempt accommodation both of which are specific HB legal definitions that does not cover the majority of sheltered housing.

In short what many housing associations call sheltered and believe it to be supported housing, when its not, will close and inevitably so.  Decommissioning sheltered housing and decanting or evicting the pensioner is what HAs will have to do as that type of sheltered housing becomes non financially viable to operate.

Radical enough for you?

In terms of allocating new properties, of which social housing has about 385,000 per year, no social landlord can afford to put a benefit household in a 3 bed property as their level of HB that is cut makes this non viable.  As 36% of all social housing is the 3 bed or larger property and 77% of social housing tenants are the benefit household you quickly see the radical impact the benefit cap reduction has.

Even more radical!

Extremely radical operational and strategic change is thrust upon all social landlords by these extremely radical housing benefit policies of the LHA maxima and overall benefit cap.

That will be a huge challenge for social landlords and whom the former Housing Minister Grant Shapps called with much validity the lazy consensus.  This is the same sector who in the past few months have been awarding themselves awards and opining just how innovative they are by the way!

In their defence prior to 1 April 2013 when the bedroom tax began all social landlords never saw a cut in housing benefit at all and full HB was the norm and so they were able to take all prospective tenants and especially the benefit households.

Yet now all social landlords cannot afford the benefit tenant household and that is a massive turnaround and obviates such questions as Where will the benefit tenant household live!?

The answer to that can only be that housing associations will refuse to house the benefit tenant household leaving that to council landlords … who also can’t afford to house them … leading to a huge upsurge in homelessness and every local authority having a skyrocketing temporary homeless bill – a transfer of financial risk from central to local government of around £3 billion per year in my estimation.

So anyone who thinks that the OBC and the LHA maxima cap are just another two welfare reforms is hugely mistaken.  Note too that when Universal Credit comes in that households will lose more money through the Benefit Cap than they do now, much more in fact!

All the #ukhousing peeps who said I was merely a dsytopian scaremonger eh!

All the #ukhousing peeps who said I just despised HAs an the NHF in particular

All the #ukhousing peeps who said I was naive in stating #ukhousing actually challenge these policies ..

Has the penny dropped yet? Or are you still of the David Orr view that all is fine and dandy with this government’s housing and housing related policies?  Anyone still believe that a so-called social landlord can still be social?  Anyone still believe that the only or major social housing crisis is build build build? …



11 thoughts on “All ‘social’ landlords to abandon all business models due to radical HB changes

  1. I am a self funding pensioner residing in a sheltered housing scheme so theoretically I am not affected by the LHA Cap.

    But the reality is that a significant number of neighbours in my scheme are HB dependent households. Having known many for several years I cannot envisage them having the resources needed to pay the rental shortfall that will hit our landlord housing association when the changes come into operation.

    When our scheme is closed due to it being financially unsustainable I will be collateral damage but still homeless along with my HB neighbours!

    So I rephrase Joe’s question “Where will the benefit tenant household live!?” to ; Where will all of our homeless residents live?

  2. I am affected by the Bedroom Tax, but my benefits are not high enough to be affected by the Benefit Cap and the LHA in my area is higher than the rent on my house. I can’t be the only person in this situation, surely?

  3. Kindly give the ‘sector’s’ great and good a hat to eat as as result of abandoning business models, the ‘sector’ as abandoned any remaining shred of social mission. Just another byproduct of the ‘sector’s’ ongoing apathy and ineptitude!

  4. Useful article, thanks. But please could you edit it to clearly state what each and every acronym stands for to make it easier to read and understand for the uninitiated?

    I knew that LHA is Local Housing Allowance and HB housing benefit, HA housing association, NHF Nationa Housing Federation, but it took me a while to work out OBC is “overall benefit cap” and I’m still not sure what SAR and SRS are?

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