Ministers have announced the intention to except all supported
housing from the one per cent rent reduction required under the
provisions of the Welfare Reform and Work Bill for a period of one
year.
During the debate on the Welfare Reform and Work Bill in the
Report Stage in the House of Lords on 27 January 2016 the
government announced a one year exception to the one per cent rent
reduction for all supported housing pending completion of a review
into the funding of supported housing due to be completed and
published later this year.
Speaking in the debate in the House of Lords, Lord Freud
(Minister for Welfare Reform) announced the one year exception
saying:
"I can announce today that the
Government will put in
place a year-long exception for all supported accommodation from
the 1% reduction. That gives us the time to study the
evidence from the review. We will start to get findings in the
spring, as I said. We will work with the supported housing sector
to ensure that the essential services they deliver continue to be
provided after the year-long exception-also making sure, of course,
that the taxpayer is protected and the Government's fiscal
commitments are met, and that we make the best use of the money
available. We will look urgently at this to provide certainty for
the sector. While the
exception is in place, those providers will be able to continue to
apply the CPI plus 1% rent increase to any supported accommodation
that they own.
My noble friend Lord Young asked
what we include in the sector. As I said, it is a wide definition
and it includes housing
such as domestic violence refuges, hostels for the homeless,
sheltered accommodation for older people, extra care housing, and
accommodation for people with mental health or drug/alcohol
problems, ex-offenders, people at risk of offending, women at risk
of domestic violence-a large number of groups. I have spelt
out some, but there will be others. I can also confirm that the
one-year exception will extend to housing co-operatives, almshouses
and community land trusts. The detail will be set out in
the regulations we will bring forward very soon, following Royal
Assent. The intention is that these regulations will be in
place for the start of the new financial year." (Source Hansard 27
Jan 2016 : Column 1378)
The government came under pressure in the debate to exempt
supported housing from the related policy of capping the Local
Housing Allowance (LHA) which limits the maximum housing benefit
entitlement for supported housing tenants at the LHA level, however
the government would not commit to do so.
Following the Ministerial announcement that all supported
housing would be excluded from the one per cent rent cut for
2016/17 lots of questions have been raised about the definition of
supported housing and whether the exception includes supported
housing provided by stock retained councils as well as housing
associations. All the exceptions will be confirmed in regulations
and we expect these to be available in the next few weeks, however
in the meantime DCLG has provided the following statement of clarification:
"Our intention is that this be a
wide definition. All supported housing as currently set out in
the rent standard guidance will be excepted from the rent reduction
for a period of 1 year and providers should use this as a guide as
they set rents for 2016-17. The exact definition will be defined in
regulations. For the purposes of clarity we intend that the
exception will include though not necessarily be limited
to:
- domestic violence refuges and other specialist
accommodation based support for domestic violence victims
- hostels and other accommodation for the homeless
- sheltered accommodation for older people
- supported accommodation for young people
- extra care housing,
- accommodation for people with mental health or drug/alcohol
problems,
- accommodation for people with disabilities
- accommodation for ex-offenders and people at risk of
offending.
Ministers have confirmed that
alms houses, cooperative housing associations and community land
trusts will also benefit from the yearlong exception.
As we draft the regulations we
will be reviewing the definition in the rent standard, together
with other definitions to ensure that the regulations provide
comprehensive coverage and are clear about what is included. For
sheltered and extra care housing, we would look to refer to the
definitions contained in the Housing our Ageing Population: Panel for
Innovation report.
Increases in the level of rent
for supported housing will be limited to CPI +1%. This is in
addition to an exception for specialised supported housing, also
covered in the rent standard guidance which will be excepted from
the rent reductions completely and for the entire four year
period.
During the course of the Bill,
Ministers have announced that providers of supported housing would
be able to set rents for new and relet supported housing at
10% above the social rent rate (i.e. formula less the appropriate
reduction). During the exception period the intention is that
providers will be able to set new rents at 10% above the 2015/16
formula rate uprated by CPI+1%.
We are of course aware that
providers have raised concerns about bringing housing benefit for
social tenants into line with housing benefit for people in private
housing which will start to take effect from April 2018. We will
put in place the appropriate protections for those in supported
housing. As we work towards implementation, DWP and DCLG will be
working closely together with the sector to make sure the right
protections are in place."
Since the announcement ARCH has been in contact with DCLG
officials and it is understood that the regulations exempting
supported housing from the one per cent rent decrease will apply
equally to housing associations and to stock retained councils and
that the definition of supported housing in the regulations is
likely to be based on the existing definition in the HCA Rent Standard 2015
(paragraphs2.13 - 2.15) and the existing Guidance on Social Rents
2014.
Subject to the Bill receiving Royal Assent and publication of
the associated regulations specifying the exceptions, stock
retained councils may wish to consider the option of applying the
CPI plus one rent increase to their supported housing stock
(including sheltered housing for the elderly) for one year from
April 2016 or as an alternative consider freezing supported housing
rents at the current level.
This late announcement may cause some difficulties for those
local authorities who have already taken (or are about to take)
rent setting reports for 2016/17 to their Council or
Cabinet/Executive Boards - not least because the exceptions are yet
to be formally confirmed by regulations following Royal Assent.
For stock retained councils, whose' stock of sheltered housing
and supported housing form a relatively small percentage of their
overall housing stock, the proposed exception may also give rise to
questions from tenants and the local media as to why rents for
supported housing tenants are increasing while the majority of
rents for other tenants are being reduced. Nevertheless the
exception to mandatory rent cuts for supported housing may give
stock retained councils some relief from the significant impact on
their rental income and their HRA Business Plans of the one per
cent per annum mandatory rent cut over the next four years and the
imposition of the RTB levy to be funded by sale of high value stock
and the associated loss of rental income from any stock required to
be sold.
We've received a number of queries from ARCH members about the
exception of supported housing from the mandatory one per cent rent
reduction and how this will be applied in practice. DCLG officials
are considering putting together a response to Frequently Asked
Questions to help registered providers. If you have any questions
or queries about these proposals as they stand and would like these
to be put to DCLG please email ARCH CEO, John
Bibby with your questions.
The Welfare Reform and Work Bill is scheduled for its Third
Reading in the Lords on 9 February 2016 following which the Bill
will pass back to the Commons for consideration of amendments prior
to receiving Royal Assent.