Housing Options explains how current changes to the funding of housing will reduce housing mobility, home ownership and undermine supported living.
This is an older article some of the data is now out of date. Our most recent report A Fair Society? gives the best overview of the impact of cuts on people in poverty and disabled people. However, some of the examples below are still relevant.
Author: Housing Options
Text updated 18 May 2011
The last 10 years has seen a massive shift away from placing people with learning disabilities in institutions and care homes towards enabling more ordinary housing options and therefore more ordinary lives.
The cost of institutionalising people with learning disabilities has not only been expensive in monetary terms, it has also cost many thousands of individuals the ability to lead an equal and independent life. We are still undoing the impact of institutionalisation and it is an expensive task.
The changes under the coalition government that impact on availability of housing for people with learning disabilities will have a profound impact on the equality of peoples lives, particularly those that live in areas with high cost housing. A major threat from these cuts is that we undo years of hard work and return to the false economy of crisis led ‘warehousing ‘of people.
There are three major budget cuts and regulation changes that will have the most impact on availability of housing to people with learning disabilities: reduced spending on social housing, changes to Local Housing Allowance to meet rents in the private sector and changes to Support for Mortgage Interest. None of the individual cuts or changes in themselves seem disastrous but it is the combined impact of the reduced availability of the three main housing sources- public sector, private sector and home ownership that will effectively cut off housing choice to people with learning disabilities.
Spending on social housing will be cut by 60% and an increase in social housing rents is expected to fund new development though this is unlikely to fund the shortfall in social housing. Decisions about funding on social housing will be made locally and whether or not people with learning disabilities get social housing will be dependent on whether the adult social services department has a strong enough voice and can present the case for more housing against other competing priorities.
Buying a home and funding an interest only mortgage through Income Support has now become virtually impossible for disabled people following a massive reduction in the levels of interest the DWP will pay (6.08% to 3.63%). Buying a home with a mortgage of £100k requires an individual to contribute £47 per week from their own income which is impossible for most people with disabilities. This change has coincided with new FSA guidance to lenders and at present all mortgage products aimed at people with disabilities have been taken off the market.
Renting in the private market will be restricted because of changes to Local Housing Allowance and will have a particular effect on people with disabilities needing to live in areas of higher cost housing in London and the Southeast. A sum for discretionary housing payments will be made to local authorities to make up the rent shortfall for existing and new customers but these payments are discretionary and cannot be guaranteed for a long term. This will make the option of privately rented housing for some people with learning disabilities too insecure to contemplate.
When looking at some of the outlined budget cuts individually, the government has attempted to balance the effects of the changes with a redirection of funding, a discretionary pot of money or increased local flexibility. Some appear a positive move but it is remains a lottery as to whether people with learning disabilities will get housing and it will be dependent on whether there are the right people in the right jobs locally to advocate on their behalf. We know from experience that people with learning disabilities and their families have had to fight for decent housing options locally in relatively good economic times and with competing priorities for housing from other groups it is all too easy to place people in care or leave people in the family home until a crisis occurs. The funding and provision of decent housing for people with learning disabilities needs to be mandatory rather than discretionary- it is a fundamental right.
Local Housing Allowance levels will be restricted to the 4 bedroom rate, the 5 bedroom rate is scrapped.
A new upper limit will be introduced for each property size, with upper limits set at:
This creates a potential problem in expensive areas, particularly in the South East.
The size criteria has been adjusted to provide for an additional bedroom for a non-resident carer where a disabled customer has an established need for overnight care. Although this is a positive move, its effect has been diminished by the introduction of a less generous formula for calculating LHA (see below).
The Local Housing Allowance was set at the 30th percentile of rents in each Broad Rental Market Area, rather than the median. It has also been confirmed that the measure announced by the previous Government for the removal of the top 1% of rents in the market evidence for each bedroom size in the calculation of Local Housing Allowance rates will not go ahead.
All properties will therefore be taken as evidence when calculating any LHA rates and rents. This means that if the cheapest banded property in a Broad Rental Market Area on 31 September 2011 was £150 and the most expensive outside of the top 1% was £200, LHA would have been set at £175 i.e. 50% (the median) of the difference between highest and lowest figures.
The rules from 1 April 2011 include rents charged in all properties, perhaps making the most expensive rent £210. LHA would be set at £168 i.e. 30% of the difference between highest and lowest. If the calculation exceeded the new upper limits for each property band it would be capped at that level i.e. if the calculation returned a figure of £300 per week for a one bedroomed property only £250 would be allowed (see caps above).
The sum allocated by Government for Discretionary Housing Payments will increase by £10 million in 2011 and by £40 million a year thereafter. Although this is aimed at giving more flexibility to local authorities to help a greater number of new and existing customers who face a shortfall in rent because of changes to the Housing Benefit rules it should be borne in mind that Discretionary Housing Benefit payments are not an entitlement. If anyone is able to secure an award they cannot rely on it as a guaranteed ongoing payment for the life of the tenancy, creating risks for long term security, a key issue for many disabled people.
Spending on building social housing will be cut by 60%. New social housing rents will increase to equal up to 80% of market levels. It is anticipated that this increase in rental income will support the building of 150,000 new social homes between 2011 and 2015. Over £2 billion of capital funding will be made available for the Decent Homes programme.
The Disabled Facilities Grant will be retained and rise with inflation, but will no longer be ring fenced.
Local authorities will receive a non ringfenced New Homes Bonus for every new home built, which matches the Council Tax for each home developed for 6 years.
The allowable interest rate for people applying for mortgages under the Support for Mortgage Interest scheme has been reduced to 3.68% from 6.08%. This has left some existing customers having to pay the shortfall from their benefit income. It has also led to a hold on processing new applications while mortgage products are adjusted to reflect this change. It is not clear when, or if, this option will become available on the market again. Even if it does the reduction in rate allowance will make it unaffordable for some people on mid rate DLA or above and all people on low rate.
The Government announced further measures for the reform of Housing Benefit in the longer term, these will require primary legislation:
The Government announced its intention to reform the way Local Housing Allowance rates are set in future and, from 2013/14 onwards, Local Housing Allowance rates will be uprated on the basis of the Consumer Prices Index, rather than on the basis of local rents. Local rents usually reflect Retail Price (RPI) Index inflation rather than Consumer Price Index (CPI). This means that increases in allowances will be reduced and eroded increasingly year on year as RPI is invariably higher than CPI.
From April 2013, Housing Benefit for working age social rented sector customers will be restricted for those who are occupying a larger property than their household size and structure would warrant. There will be consultation on the detailed design of this policy. The need for larger properties for disabled people might normally be seen as reasonable should be factored into the design of this policy. This might include the need for accommodation for non resident carers or for specifically designed layouts requiring more space
Changes to Housing Funding © Housing Options 2011.
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