Written evidence submitted by Paddington
Citizens Advice Bureau
EXECUTIVE SUMMARY
1. Whilst we understand the need to place a cap on
rents paid by the tax payer, especially in central London where
the LHA was spiralling out of control, we feel that the impact
of the proposed changes have not been fully taken into account
and may have a disproportional effect on large families and those
with children living on a low income. This may have implications
for the DWP's equality impact assessment as ethnic minority families
are over-represented amongst larger households. We feel that the
measures will put additional stresses on the homelessness service
as more people apply as homeless for council accommodation. This
could lead to more households in Westminster having to move to
temporary accommodation in outer London and this will affect the
levels of rent and social cohesion in those areas as well.
IMPLICATIONS OF
ANNOUNCED CHANGES
2. Incentives to Work and Access to Low Paid Work
- (a) Motivation to work may be increased because
of the need for money to pay the rent. However, if housing benefit
is automatically reduced to 90% of the initial award for those
people who have been on JSA for over 12 months more people are
likely to apply for ESA, putting extra pressure on the delivery
of that benefit. Also it may lead to parents separating as single
parents on benefit will have more housing security (at least until
their youngest child is five) than couples on JSA. This would
lead to a need for more housing.
- (b) If families in inner London are forced
to move out of privately rented accommodation because of the proposed
cap in Local Housing Allowance it will mean that people in low
paid work in central London will have to pay more in travel costs
to work. This may lead to more low paid workers struggling to
make ends meet. Employers may look for ways of reducing their
overheads by reducing the number of low paid workers they employ
or there could be an increase in the use of illegal workers.
3. Levels of Rent
- (a) Rents may drop in central London because
of the cap but it may also result in many families being evicted
because of shortfalls in rent.
- (b) Availability of properties for rent in
central London may decrease as landlords take the opportunity
to do up properties and then let them out at higher rents to those
who are not in receipt of benefit. This will mean if the policy
is reversed in the future there may be less available properties.
- (c) Rents in outer London may increase as
the demand for them grows as people are forced to move from central
London. Regional variations, in theory, will diminish. However,
because of the shortage of housing in the south east of England,
this might not be the case. It is unclear where the people who
are housed under homeless legislation will be found places to
live and whether there will be a cap on temporary accommodation.
4. Shortfalls in Rent
- (a) Westminster City Council have had a policy
of encouraging people who are homeless to be housed in private
rented accommodation—these people may now be evicted if
their rent is capped. We have already seen clients who have been
affected by the cap in LHA. One client, a single parent with two
children, fled her home in 2008 because of domestic violence and
stayed first in a hostel and then with friends. She was eventually
housed in private accommodation in Westminster and although the
rent was high it was covered by the 2009 LHA of £520pw. The
client realised that the LHA was subject to variation but had
not expected very significant variation. On 17 June 2010 she was
sent a letter saying that because of the reduction in LHA her
HB would fall £40pw below her rent with effect from 28 June.
Given the time for the letter to arrive this meant she had only
just over a week's notice of the change. The client was very distressed
because she has just settled into the flat and got used to the
neighbourhood, after two years of disruption. She has also just
got over all the anxiety caused by the domestic violence. She
has appealed and also applied for Discretionary Housing Payment.
- (b) Clients facing unexpected shortfalls
generally need to move home, often at short notice, to avoid falling
into rent arrears and the possibility of making themselves intentionally
homeless. This is particularly hard for families whose options
can be limited to moving to a smaller property and risk overcrowding,
or moving to a cheaper area and breaking social ties, such as
jobs, schools and family support.
5. Levels of Evictions and the Impact on Homelessness
Services
- (a) The impact on the homelessness service
in Westminster is likely to be significant as the levels of evictions
rise. It is estimated that all of Westminster LHA recipients will
be above the proposed cap—this represents about 5,000 households.
As a result there will be additional administration costs on the
Homelessness Services as people ask for help through their housing
options service and as more people apply as homeless to be put
in council accommodation.
- (b) Those families who are able to get DHP
to help with the shortfall in rent will presumably only be able
to get this help for a short while. If the landlords are not prepared
to reduce the rent they will be forced to move out and will apply
as homeless. There needs to be transitional arrangements put in
place, with particular consideration being given to those who
have been advised by their local authority to accept a Private
Sector Lease as an alternative to social housing.
- (c) Whilst the increase in DHP may help those
with families in the short term, it seems that those in shared
room and one-bed properties (approx 3,000) will not get any help
with the shortfall and may not be eligible for help under homeless
legislation even though they may have health issues. We have already
seen a client who was living in private rented accommodation in
the Regent's Park area of Westminster who has had his LHA reduced
by £20pw because of changes in the Local Housing Allowance.
He had been in receipt of ESA, because he suffered from severe
depression, and full Housing Benefit When he applied for DHP he
was turned down because he was told that the funds were being
allocated to people with families.
6. Landlord Confidence
- (a) If rents fall then landlords may not
be able to afford to rent out properties. More landlords may default
and houses repossessed. In many areas this could lead to the housing
market adjusting downwards but in central London this is unlikely
to be the case as there many other external factors which influence
rental prices in this area.
7. Social Cohesion
- (a) The proposed changes are likely to result
in people having to move to concentrated areas of lower cost housing
and this will affect education, health and social care services.
Children may have to move from schools or travel further to school
if they are forced to relocate and they may well lose their social
network. Employees may have to travel further to and from work.
The proposed caps may result in people living in poorer quality
accommodation and suffering from disrepair. Central London, in
effect, will be out of reach for any one on a low income looking
to rent in the private market.
8. Disabled People, Carers and Specialist Housing
- (a) It is a positive move that from April
2011, Housing Benefit claimants with a disability and a non-resident
carer will be entitled to funding for an extra bedroom. However,
specialist housing should be built in inner city areas to cater
for the needs of disabled people.
9. Older people, large families and overcrowding
- (a) The proposed cap on the four-bedroom
rate of £400pw and the removal of the five bedroom rate is
likely to increase overcrowding for large families—this
might lead to family breakdown and children living with single
parents and different siblings. Older people may find that their
family is forced to move from the local community leaving them
more isolated.
RECOMMENDATIONS
10. There should be discretion as to whether
the new LHA caps are put in place for existing tenants. If the
LHA caps are introduced this should be done over a period of time
and not necessarily at the tenant's next annual review. This would
allow tenants to make alternative arrangements (those with children
in school should be allowed to remain in properties at the old
rate until the end of the school year). Those with fixed term
tenancy agreements should be given additional time at the end
of their agreements (possibly up to six months) to find alternative
accommodation.
11. Any transitional arrangements that are put
in place should give particular consideration to those who had
been advised by their local authority to accept private rented
accommodation as an alternative to social housing.
12. Reintroduce the ability of HB officers to
restrict benefit payments on rents that are considered unreasonable.
13. Prioritise households for DHP who are in
work in their area and would face additional costs moving to their
jobs.
14. The lack of affordable housing in the Capital
can only be addressed by building new housing and maintaining
the housing stock for rental accommodation. The core problems
need to be addressed. In central London there is obviously extra
pressure on social housing. Perhaps the allocation of social housing
needs to be looked at again and the obligation to house people
under homeless legislation could be taken away from local government
and transferred to a national level.
6 September 2010
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