Impact of new funding model on supported and sheltered housing survey

Our research looks at the impact of the Local Housing Allowance cap on both existing schemes and development programmes.

21 August 2017

From 2019, it is proposed to apply the Local Housing Allowance (LHA) cap to all claims in supported and sheltered housing with funding devolved to local authorities to provide top-up funding. There are concerns that in some areas the LHA cap will create a gap between the cost of services and the claimant’s entitlement to benefits to cover housing costs, and this will impact the financial viability of supported, sheltered and extra care schemes.

To get a more comprehensive picture of the impact of the LHA cap both on existing schemes and development programmes, we conducted a survey in May 2017. This briefing summarises the key findings:

  • Almost 4 in 10 (39%) respondents said that they have postponed new developments, 10% have cancelled new developments, 7% are planning to close existing schemes between now and 2019 and 1% said that they have decommissioned existing schemes.
  • The planned development output of supported, sheltered or extra care homes pre and post announcement of the new funding model has dropped from around 8,800 to 1,350 homes, representing a decrease of 85%.
  • The two most important reasons for schemes still going ahead are the LHA rate being high enough to cover rents and service charges, and the fact that associations believe that local top-up funding will be available when the time comes.
  • The areas of certainty that are most needed are a higher cap than the LHA level to cover a greater proportion of rent and service charges, and a long-term commitment (set out in legislation) from the Government to maintaining any ring fence.
  • More than half of respondents also provide short-term/transitional services. These organisations have a slight preference for a funding mechanism where funding is delegated to local authorities (as opposed to tenants having to claim costs through the benefit system).
  • 77% of respondents said that their organisation has performed an impact assessment on the potential impact of the Government’s proposed model.