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LHA cap will make social housing unaffordable in Wales, sector warns
Social housing in Wales will become unaffordable for the people it is intended for if it becomes subject to the Local Housing Allowance (LHA), a new report has claimed.
Analysis of Welsh Government data by Community Housing Cymru (CHC), which represents the social housing sector, has found 62.7% of LHA rates fall below the lowest third of the local rental market.
The mismatch means that less than 10% of private rented sector homes are accessible for people on housing benefit. In Neath Port Talbot, claimants can only afford the bottom 2% of the shared accommodation rental market unless they top up their income through other means.
LHA rates are calculated based on the lowest third of local market rents and are used to calculate how much housing benefit private tenants receive.
The system is supposed to ensure that 30% of private rented sector homes are affordable for people claiming housing benefit, but very low rental market levels in parts of Wales mean LHA rates can often fall well below the actual rents available.
The UK government plans to apply the LHA cap to social housing from April 2019, with sector leaders warning that tenants claiming housing benefit could struggle to pay the rent in some areas.
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Researchers also warned of a “postcode lottery”, with a tenant living in a one-bedroom home in Cardiff unlikely to see any gap between the LHA rate and their rent, while someone living in a similar property in rural Powys can expect a £15-a-week shortfall.
“This flawed policy will make social housing unaffordable for those it was built for and for those who need it most,” said Stuart Ropke, chief executive of CHC.
“It’s counter-productive to implement a welfare policy which makes social homes unaffordable for tenants, and it’s imperative that action is taken immediately to reverse the decision to apply LHA rates to the social rented sector.”
One housing association which could be particularly badly affected is Cynon Taf, a 1,850-home landlord in Rhondda Cynon Taf in South Wales, where some tenants could face a £20 rent shortfall when the LHA cap hits.
Michelle Reid, chief executive of Cynon Taf, said: “This is going to mean we may not be able to provide all the services that we provide now.
“We are putting in an incredible amount of work to make sure that people are maximising the amount of money that they can bring in, but the fundamental thing is if you are operating in a poor area of the country then you’ve got a much bigger hill to climb.
“That is not what social housing was set up to overcome, and the private sector is not going to form any kind of safety net.”
The analysis also found that LHA rates are calculated using sample sizes of only a handful of homes in some areas. For example, in Carmarthenshire, the Shared Accommodation Rate is based on a sample of just 21 rents.
A spokesperson for the Department for Work and Pensions said: “The best way to help people pay their rent is to help them into work, and employment is now at a record high.
“Our welfare reforms are incentivising work and restoring fairness to the system, and we continue to spend £24bn a year helping people across the UK with their housing costs.”
