Secretary of state for Work and Pensions, Damian Green, announced the government would be deferring the imposition of the Local Housing Allowance Cap to people living in hostels and supported housing. The deferral will extend to fully mutual and co-operative housing and community land trusts.
The Local Housing Allowance is used to calculate housing benefit for tenants who rent privately, with a limit to the total amount of benefit that those aged 16-64 can get.
Over the last couple of months, the Confederation of Co-operative Housing (CCH) has been involved in a government consultation on the future of funding arrangements for the sector.
Last year , then-Chancellor George Osborne announced in his spending review that housing benefit for social renters taking up new tenancies to Local Housing Allowance rates would be limited from April 2018.
Under those plans, people under 35 in social housing who are single and without children, with tenancies signed after 1 April 2016, would have only been able to claim the same amount of benefit as a private tenant was able to claim for a room in a shared house.
However, last week, Mr Green confirmed in a parliamentary written statement that the government would be deferring the application of the policy for supported housing until 2019/2020. He added that the government was looking to develop a new funding model for the social housing sector.
“I can also confirm that the deferral until 2019/20 will extend to fully mutuals/co-operatives, almshouses and community land trusts while we consider whether any additional arrangements will be necessary for this group in the longer term,” he wrote.
In March 2016 the government introduced a one-year deferral for supported housing, fully mutuals, co-operatives, almshouses and community land trusts from the reduction of social rents in England of 1% a year for four years from 2016.
Mr also confirmed that the government would apply the rent reduction to supported housing, with rents in these properties decreasing by 1% a year for 3 years, up to and including 2019/20.
The existing exemption for specialised supported housing will remain in place and will be extended over the remaining three years of the policy for fully mutuals/co-operatives, almshouses and community land trusts and refuges.
Nic Bliss, head of policy for CCH, said: “The CCH welcomes the announcement that fully mutual co-operatives and community land trusts will be exempt from the 1% rent cut required of other registered provider landlords for the remainder of the programme until 2020, and that the policy for limiting housing benefit for the members of fully mutual co-operatives and community land trusts to Local Housing Allowance levels will be deferred until 2020.
“The CCH had carried out an extensive consultation with our co-operative housing members on these changes, and whilst most housing co-ops are fully sustainable businesses that could have adapted, there were some co-operative housing schemes set up more recently who would have had difficulties in sustaining their business plans had these changes been imposed on our sector.
“However, we also reflected the views put to us by many of our members that it is part of our self-determination that co-ops should be able to set their own rent levels – and that our members would do this responsibly – balancing the need to not overly burden tenants with higher rents (our sector has generally been able to maintain low rents during difficult times) whilst maintaining viable business plans.
“These welcome exemptions will enable our sector to maintain our self-determination and continue our work to house people in quality affordable homes – and will particularly enable us to continue housing people under 35 – who would have been particularly affected by LHA caps – and doing what co-ops do best – providing a platform for such people to be able to get into work and develop their lives.”