Welfare Reform: When ‘affordable’ rents are no longer affordable

Posted: 28th February 2021

Welfare Reform: When ‘affordable’ rents are no longer affordable

Everyone understands the impact of the welfare reform changes on benefit dependant private renters in Westminster. Many people don’t think this is unreasonable. After all, why should the state assist benefit dependent households to live in one of the most expensive housing areas in the world? Not many people can afford to.

But surely it will not affect families living in affordable housing outside of central London? If you think this – think again!

What so far seems to have fallen under the radar has been the potential impact of the £500 weekly benefits cap on the new affordable rent model. Of course, the policy intention of the weekly cap is to incentivise work by ensuring that unemployed households do not receive more in benefits than those working for average wages. It is also the Government’s intention that welfare recipients have the same pressures as working households to seek out reasonably priced accommodation in areas that are not beyond their means.

We recently undertook some research for a registered provider on the impact of the welfare reform changes for their tenants. Their geographical focus was outside of central London, in fact outside of London altogether and into one of the Home Counties. The results surprised us. Average sized families with two or three children being charged the new affordable rent level were already facing a restriction due to the (Universal Credit) £500 per week limit.

This is a clear policy clash. On the one hand, a desire from Government to bring social rents closer to market levels (80% of market rent) conflicts with a new welfare system that in some areas and for some households will restrict benefit payments to below that level. And it is not just inner London.

So what if some families living in social housing, where rents are by definition supposed to be ‘affordable’ are no longer able to pay their rent? Social housing has always been considered a safety net, but even those most in need, without paid employment and relying on state benefits may in future find themselves in trouble; accumulating rent arrears and potentially at risk of losing their home.

Social landlords must start doing their calculations now! How are your tenants going to be impacted?

Graham Hishmurgh is an Altair Associate Director.

Want to find out more? Contact Graham on 07940 569395.

Going to the CIH South West Event in Torquay? On 26th and 27th April Judy Wayne will be running sessions to look at ideas and solutions for surviving the welfare benefit changes

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