Thursday, 05 December 2013
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Benefit cap to force families from temporary homes
Joe – you asked about the temporary accommodation subsidy regime.
The amount of money that councils and housing associations can claim towards the cost of providing homeless households with temporary accommodation is based on the size of the property and the Broad Rental Market Area (BRMA) in which it is situated.
In London, the most that can be claimed under the subsidy regime is 90% of the January 2011 Local Housing Allowance (LHA) rate plus a management allowance of £40 per week. A higher management allowance of £60 per week is paid to local authorities outside London.
Temporary accommodation charges are ‘capped’ at £500 per week in Central London and £375 per week for all other areas.
As most temporary accommodation is leased or let from private landlords / suppliers and the subsidy regime only takes into account 90% of the rent, the amount of money that most councils and housing associations are able to charge for temporary accommodation in London is usually insufficient to cover the full cost of procuring and managing the temporary accommodation.
The DWP has said that, from April 2013 onwards, it wants residents of temporary accommodation to pay the same rent as tenants living in the private rented sector. To achieve this, it wants to pay a management allowance (which may be different from the current allowance) direct to councils and housing associations, and to assess the Housing Benefit / Universal Credit claims of homeless households as mainstream LHA claims. This will mean that the rent will be based on the 30th percentile of rents in the area and will be subject to the LHA Caps of £250, £290, £340 and £400.
If the rents are harmonised in April 2013, the Overall Benefits Cap will have the same effect on workless families living in temporary accommodation as it will on workless families living in private rented accommodation. Based on the 2012/13 Benefit Rates, a couple with 4 children living in a 4-bedroom home would receive only £111.19 per week towards their rent. This is substantially less than last month’s weekly LHA rate for a 4-bedroom home in Enfield (£350), Crawley (£288.46), Bristol (£216.92), Cardiff (£184.82), Manchester (£173.08) and Newcastle (£155.77).
I understand that the DWP has still not completed a New Burdens Assessment. I do hope, therefore, that local authorities have worked out, for themselves, the size of the financial burden that they will be taking on when the Overall Benefits Cap of £500 is introduced, homelessness increases and so much of the rent that they charge (for temporary and permanent accommodation) cannot be collected.
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