Local Government Lawyer Insight July 2017 LocalGovernmentLawyer 38 number will significantly increase as a result of the new cap. Recent analysis by the Chartered Institute of Housing shows the new lower benefit cap is likely to impact 116,000 households with between one and four children. The larger the family, the greater the impact as this new cap is not tapered by the number of children in the family. The new lower cap will impact nearly 10 times as many households as previously. The National Housing Federation (NHA) reported in October 2016 on the impact of applying Local Housing Allowance rates to general needs social tenants and have identified that of those under 35, 80% – 98% will face a reduction of at least £15.58 per week. This is a significant reduction in household income and will bring many under the poverty line, particularly those families already struggling to survive and will have a direct impact on re-possessions which are likely to increase significantly. Whilst the overall number of tenants in arrears because of the bedroom tax has fallen, the situation for those who are in arrears has got worse. Housing associations report that 64% of affected tenants in arrears are in that situation because of failing to pay the bedroom tax. Supported and sheltered housing The National Housing Federation was instrumental in securing a one-year exemption to the 1% rent reduction but it is due to be applied in 2018. The Department for Communities and Local Government (DCLG) confirmed the definition will include refuges, hostels, sheltered and supported housing, extra care schemes, accommodation for those disabilities, mental health problems of ex- offenders. The capping of the LHA is also delayed but is due to be applied in April 2018 for new tenancies after April 2017, so the impact will be felt soon. Alongside there has also been an expansion of the definition of “exempt” accommodation to “specified accommodation” and is currently excluded from the benefit cap and bedroom tax. Many tenants pay for their care and support through a service charge and by reliance on DHP, which is simply unsustainable in the longer term due to increasing demand on these support services. On 15 September 2016, the Government announced details of its proposed direction of travel for how supported housing will be funded in the future. The key elements of this proposal were that the LHA cap will apply to all tenants in supported and sheltered housing from April 2019. Housing costs will continue to be paid through the benefit system up to LHA level, but only the higher one-bedroom LHA rate will apply for under 35s. There will then be a top up from the local authority from ring-fenced funds, from an allocation from the DWCLG. The 1% rent cut applied from April 2007 for three years (excepting refuges, alms houses and co- ops). The detail has still to be provided. There is concern amongst supported and sheltered housing providers that Government plans to cap benefit entitlement at LHA rates from 2019 could adversely affect their sustainability as a business. This form of funding could lead to uncertainty, impacting on development proposals. There is to be a pilot by Greater Manchester Housing Providers (GMHP) using a national rate to set rents in supported housing, with calculations based on the typical costs of running schemes, instead of LHA. This would mean less distinction between low and higher rent areas, where in reality support costs tend to be similar regardless of location as care is based on need. Both the results of the pilot and the government response to the recent consultation are keenly awaited. Conclusion How vulnerable people are to be protected is still to be agreed and questions remain such as how local authorities will prioritise funding and whether tackling homelessness will be afforded the same priority as social care needs. There remain concerns over the level of funding available and the longevity of the ring fence. All remain to be answered. It is clear the benefit cap reduction could have a devastating impact on some of those receiving benefits and those who provide homes for them. The introduction of the Shared Accommodation Rate and LHA will inevitably lead to more evictions from the private sector and greater pressure on homelessness departments of local authorities as more families and young persons find themselves in crisis. Many organisations such as Shelter and CentrePoint are highlighting the likely impact of these welfare reforms. If tenants are no longer able to pay their rent and funds available for the provision of supported housing continue to be reduced and incomparable with the real costs of providing a service, there is a greater risk that providers themselves could struggle financially and some may even fail. Providers are ahead of the game, keen to develop innovative new homes and schemes and continue to provide these homes in a sustainable fashion, but there remains a great deal of uncertainty over funding of care for vulnerable groups, fighting poverty and homelessness and the ability to continue to offer additional services for tenants. The more prepared a provider is now, the more likely they will weather this latest storm but since the calling of a general election uncertainty has increased. The significant contribution made by registered providers to reducing the welfare bill must be recognised and their concerns over future funding of supported housing listened to and acted upon by Government, when setting the level of funding and the period of ring fencing. The results of the GMHP pilot will contribute significantly to ongoing discussions with government and their commitment to providing funding for vulnerable groups. No provider can afford to be complacent and must continue to grow and develop homes. Sarah Mansfield is an Associate in the Housing & Regeneration Team at Forbes Solicitors. Sarah is a social housing expert with over 23 years of experience and is the author of 'Housing Disrepair Toolkit' which has become the standard reference work for many housing associations and local authorities. If tenants are no longer able to pay their rent and funds available for the provision of supported housing continue to be reduced and incomparable with the real costs of providing a service, there is a greater risk that providers themselves could struggle financially and some may even fail.