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1. What we will be focusing on Impact on the affordability of housing Effect on TA Risk of legal challenge Use of DHPs Assessment of New Burdens.

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Presentation on theme: "1. What we will be focusing on Impact on the affordability of housing Effect on TA Risk of legal challenge Use of DHPs Assessment of New Burdens."— Presentation transcript:

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2 What we will be focusing on Impact on the affordability of housing Effect on TA Risk of legal challenge Use of DHPs Assessment of New Burdens

3 Impact on affordability At first, Benefit Cap applied as HB restriction A bigger impact than 14% / 25% Bedroom Tax No allowance is made for number of children or the tenure / location

4 Impact on affordability Social housing Homes let at the Affordable Rent Private rented accommodation (at LHA rates) Travellers sites Temporary accommodation

5 Example 1: affordability Council tenant with 5 children Rent: £ per week 27% of rent is not being met Receiving Child Benefit, Child Tax Credit and JSA

6 Example 2: affordability Council tenants with 4 children Rent: £ per week 35% of rent is not being met Receiving Child Benefit, Child Tax Credit and ESA

7 Example 3: affordability Council tenants with 5 children Rent: £ per week 90% of rent is not being met Receiving Child Benefit, Child Tax Credit, Carers Allowance and Income Support

8 Example 4: affordability Housing association tenants with 5 children Rent: £ per week 35% of rent is not being met Receiving Child Benefit, Child Tax Credit and Income Support

9 Example 5: affordability Housing association tenants with 4 children Rent: £ per week 59% of rent is not being met Receiving Child Benefit, Child Tax Credit and ESA

10 Example 6: affordability Housing association tenant with 6 children Rent: £ per week 85% of rent is not being met Receiving Child Benefit, Child Tax Credit and Income Support

11 Example 7: affordability Private tenant with 3 children Rent: £ per week 25% of rent is not being met Receiving Child Benefit, Child Tax Credit and Income Support

12 Example 8: affordability Private tenants with 3 children Rent: £ per week 49% of rent is not being met Receiving Child Benefit, Child Tax Credit and ESA

13 Example 9: affordability Private tenant with 6 children Rent: £ per week 94% of rent is not being met Receiving Child Benefit, Child Tax Credit and Income Support

14 Impact on affordability Londons private rented sector is overheating Private landlords are reacting more quickly to arrears Significant increase in family evictions Harder to end LA homelessness duty

15 Potential monthly rent shortfalls Couple with 4 children living in private rented 3-bed home £810 £862 £555 £680 £654 £1,007 £862 £910 £654 £555 Based on April 2013 LHA / Benefit Rates

16 Potential monthly rent shortfalls Couple with 5 children living in private rented 4-bed home £1,347 £1,453 £1,147 £1,551 £1,196 £1,147 Based on April 2013 LHA / Benefit Rates

17 Potential monthly rent shortfalls Couple with 6 children living in private rented 4-bed home £1,529 £1,633 £1,326 £1,731 £1,373 £1,326 Based on April 2013 LHA / Benefit Rates

18 Impact on affordability Londons housing associations have started to screen prospective tenants Some are reducing exposure on TA and/or maximising Affordable Rent Many are making matters worse

19 Impact of these changes More homelessness Increased use of TA Increased mobility (from expensive to less expensive areas) Uncollected rent (TA and social housing ) Landlords of last resort (residualisation) 19

20 Effect of Benefit Cap on TA Substantial TA rent shortfalls resulting from existing / new households Increased reliance on the use of TA TA rent levels are very high (leasing) Subsidy regime will make it worse

21 Example 1: effect on TA Couple with 3 children Rent: £ per week 51% of rent is not being met Receiving Child Benefit, Child Tax Credit and JSA

22 Example 2: effect on TA Lone parent with 4 children Rent: £ per week 60% of rent is not being met Receiving Child Benefit, Child Tax Credit and JSA

23 Example 3: effect on TA Couple with 5 children Rent: £ per week 90% of rent is not being met Receiving Child Benefit, Child Tax Credit and Income Support

24 Example 4: effect on TA Lone parent with 6 children Rent: £ per week 95% of rent is not being met Receiving Child Benefit, Child Tax Credit and Income Support

25 Effect of Benefit Cap on TA As boroughs look to minimise the net cost of providing families with TA, the pace of migration will increase This will concentrate TA in lower cost areas, increase competition and inflate rents Needs to be managed

26 Risk of legal challenge Affordability of TA (Homelessness Code of Guidance) Suitability of TA (size and location) Act or omission (intentionality) Must have clear policies and good record keeping

27 Risk of legal challenge Paragraph of the Code of Guidance:... authorities [should] regard accommodation as not being affordable if the applicant would be left with a residual income which would be less than the level of income support or income-based jobseekers allowance that is [or would be] applicable in respect of the applicant...

28 Risk of legal challenge Paragraph of the Code of Guidance:... [housing authorities] need to consider whether the applicant can afford the housing costs without being deprived of basic essentials such as food, clothing, heating, transport and other essentials...

29 Discretionary Housing Payments DHPs are only able to assist transition £1.35m in 2013/14 compared to £5.2m HB losses: £2.5m (Private rented) £1.9m (Existing TA) £0.8m (Social rented) DHP expected to fall to £0.73m in 2014/15

30 Discretionary Housing Payments Cannot fetter our discretion Should consider extra funding Must be strategic Clear priorities (TA + Prevention + planned move-on) Time limited and conditional

31 Assessment of New Burdens New Burdens Doctrine To avoid any increase in the Council Tax Extra cost and loss of income HB administration Service requests Homelessness & TA Schools, social care, safeguarding, etc

32 Those in unaffordable accommodation make up only 15% of the stock, therefore given advice and behavioural changes, short term intervention can be made through DHPs, thus homelessness is zero. Caveat that if evidence is presented to show a benefit cap policy has caused increased homelessness, despite mitigations being used, then burden will be reviewed and costed based on this evidence. New Burdens Assessment 17 December 2012 New Burdens

33 Thank you for listening Any questions? Phil Harris Tel:


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