Government plans cause 85% drop in new homes for most vulnerable

25 August 2017

Housing associations providing vital supported, sheltered and extra care housing have had to slash plans to build new homes, down from 8,800 to 1,350 units, according to a new survey by the National Housing Federation.

This follows months of concern generated by Government plans to review the funding for these services, which the sector and leading parliamentarians believe will not work. A Green Paper, expected to detail the proposals, was due before the summer but has now been delayed until the end of autumn.  

A total of 69 housing associations, which together deliver a third of supported and sheltered homes in England, responded to the survey. Supported housing provides a secure, safe place for the most vulnerable, a majority of whom are older people or people with long-term disabilities, saving the taxpayer around £3.5bn in NHS costs[1].

The Government’s indecision has left residents and housing associations with little certainty about their future income, and some boards have had to make difficult decisions. For example:

  • 71 new schemes, representing 2,185 homes, have been postponed
  • 19 new developments, totalling 803 homes, have been cancelled
  • 22 existing supported schemes and 3 sheltered schemes, amounting to 132 homes, are facing closure.

The main factors for these closures and delays relate to the uncertainty about the Government’s proposed funding model and the withdrawal of funding for support services.

Where schemes are going ahead, two key reasons were cited; 24% estimate the local cap on housing benefits would be high enough in their area to cover their costs, followed by 18% who believe their shortfall would be offset by sufficient government funding.

The five-year cumulative cost to the taxpayer of failing to make up the existing shortfall of these specialist homes is estimated at £2.72bn[2].

Housing associations made a strong case for an alternative model that addresses concerns about how the money will be allocated and how long it will be available for. It was endorsed by a joint select committee of MPs, who recognised that the basis for the new system was not “a competent starting point” given it is based on the specific circumstances of the private rented market.

David Orr, Chief Executive at the National Housing Federation, says:

“These findings really bring it home: changes to supported housing funding are stopping building for the most vulnerable. Housing associations know first-hand that the proposed funding model will not work – a view backed by a joint select committee – and yet Government has failed to heed warnings.

“With social care in crisis, the role supported housing plays in alleviating pressures on the NHS is ever more important. These changes have not even come in yet and they have taken 7,000 homes for vulnerable people out of the pipeline.

“The proposed changes in funding bear no relation to the real cost of providing this type of housing. It is time Government put supported housing on a secure and sustainable footing.”  

John Glenton, Riverside’s Executive Director of Care and Support, who gave evidence at Westminster on the issue, said:

“Landlords like us have strong partnerships with local authorities, and are poised to begin developing much-needed additional supported housing. While this uncertainty over funding continues, a question mark hangs over development plans which would support some of society’s most vulnerable people. Along with other landlords, we urge the government to resolve this quickly.”

Case studies

Riverside is among social housing providers with developments on hold as uncertainty over the funding for supported housing continues.

A scheme for homeless veterans in Colchester, Essex, and an extra care scheme in Rochdale, Greater Manchester, are currently stalled.

Riverside’s Homeless Veterans Scheme - Colchester

This scheme, comprising 50 supported housing units for homeless veterans, is currently on hold due to the uncertainty over revenue funding.

The annual shortfall for people living in a one bed flat with high levels of support would be around £116 a week and almost £76 for those living in a flat offering a move-on facility.

The table below shows the current projected impact of the Local Housing Allowance cap (the lowest levels of rent in the private rented sector) for each tenant:

 Scheme details

LHA weekly cap

Proposed Target Rent + service charge

Shortfall of approx. per week

1 bed flat (with high levels of support)

£104

£220

£116

1 bed flat (with move-on facility)

£104

£180

£76


Despite council support for the scheme, the local authority is not in a position to commit to funding the gap. The annual shortfall in rent in the first year of operation would be £260,000 representing 49% of total rental and service charge income.

Riverside received a £4.5m capital allocation from the Veterans Accommodation Fund administered by the Ministry of Defence. The service has also received internal approval for significant additional subsidy from Riverside.

Riverside’s Keswick Close Extra Care – Middleton, Rochdale  

Keswick Close is also on hold, as the majority of tenants are likely to be benefit-dependent in this low-income area.

Local residential care costs range between £400 and £1000 per week. The imposition of caps means that tenants will face a shortfall in housing benefit representing over 25% of rent and service charges in the case of a 1 bed flat and 18% in the case of a two bed as illustrated below:

 Scheme details

LHA weekly cap

Proposed Target Rent + service charge

Shortfall of approx. per week

1 bed flat 

£102

£136

£34

2 bed flat 

£120

£146

£26


Without additional funding, tenants will struggle to make up this shortfall from their own incomes, and so the scheme would simply not be viable.

Keswick Close is a planned extra care scheme, which will comprise 101 homes, a mix of one and two bedroom apartments and bungalows. The scheme is supported by +£3m public investment through the HCA.

ENDS

NOTES TO EDITORS:

For more information, please get in touch with

Morgane Legendre, morgane.legendre@housing.org.uk, 0207 067 1098 or 07827 983 886 OR Linda Guest on 1051 295 6340 or linda.guest@riverside.org.uk.

The National Housing Federation is the voice of affordable housing in England. We believe that everyone should have the home they need at a price they can afford. That is why we represent the work of housing associations and campaign for better housing.

Our members provide two and a half million homes for more than five million people. And each year they invest in a diverse range of neighbourhood projects that help create strong, vibrant communities.

For more information, visit: www.housing.org.uk.

Riverside

Riverside is one of the UK’s leading social housing and regeneration organisations, owning or managing around 55,000 homes from Irvine to Kent. They have a track record of transforming lives and revitalising neighbourhoods dating back to 1928.

For more information visit

About the survey

This survey was conducted by the National Housing Federation in May 2017 with a total of 69 housing associations from across England responded, including small, medium and large organisations, who provide a wide range of supported and sheltered services.

The full survey results are available here.

About supported housing

Supported housing provides a safe and secure home that helps people to live independently and to achieve their aspirations. These vital services help a diverse range of people in communities across the country: giving women fleeing domestic violence a safe space, supporting our war veterans to adjust to civilian life or giving people with learning disabilities a chance to live independently.

The Government is currently reviewing how supported housing is funded. In September 2016, the Government announced details of its proposal for the future funding of supported housing.

  • The Government wants to cap benefit for everyone living in supported and sheltered housing to the LHA rate from 2019.
    • The LHA varies widely throughout the country, creating a real ‘postcode lottery’ of support. Where it is low, the gap between the amount paid through universal credit and the actual rent will be high. Tenants in those areas will struggle to make ends meet.
    • The LHA is a reflection of the cost of renting a home in the private rented sector. It bears no relationship to the cost of providing specialist supported housing.  
  • At the same time, money will be transferred to local authorities to allow them to fund the additional costs.
    • But there is presently no indication of what that mechanism might be, when it will be developed and what it will look like, giving housing associations very little assurance about whether they will actually receive this funding.
    • The local top-up funds will be cash-limited and discretionary so there is no guarantee that a service will receive the top-up money.
  • Providers have been subject to a yearly 1% rent reduction since April 2017 for three years, apart from refuges. 
    • For housing associations, this represents a significant loss of income, which has had a significant impact on their capacity to build new homes.

The Government must take this opportunity to fully fund supported housing, and put these vital services on a sustainable footing for the long term.

To help persuade the Government to ensure that every person who needs extra support has a home that meets their needs, we launched the Starts at Home campaign.

The National Housing Federation also undertook a large-scale consultation with its members and put forward a proposal which sets out what we believe is the best achievable framework for the sector.

 

[1] Frontier Economics (2010) Financial benefits of investment in specialist housing for vulnerable and older people, see: https://www.frontier-economics.com/documents/2014/06/financial-benefits-of-investment-frontier-report.pdf

[2] National Housing Federation (2017), Strengthening the case for supported housing: the cost consequences, see: http://s3-eu-west-1.amazonaws.com/pub.housing.org.uk/NHF_shortfall_housing_FINAL.pdf