Friday, 27 February 2015

London Councils fears benefit cap will impact on housing for homeless

Providers warned over temporary housing plan

Housing associations pulling out of managing temporary accommodation due to benefit caps risk reducing the amount of available stock for homeless households, London Councils has warned.

It emerged this week that some associations in London are issuing pre-emptive eviction warning notices to people in temporary accommodation who are likely to be hit by the £26,000-a-year benefit cap.

Associations are doing this where they manage properties used by local authorities for temporary accommodation which are owned by private landlords. Under private sector lease arrangements associations have to guarantee a level of rental income to the landlord, and will be out of pocket if the tenant falls into arrears.

A number of associations are serving notices warning tenants could be evicted and are considering terminating leases early and returning the properties to the private landlords.

Nigel Minto, head of housing at umbrella group London Councils, said he ‘appreciates the challenges’ associations are facing. But he added: ‘We would be concerned if there were significant hand-backs of properties as this would further reduce the amount of stock available to house homeless households.’

Mr Minto estimated associations manage around 2,000 homes used as temporary accommodation in the capital.

This week it emerged that at least three associations - Genesis, Newlon Housing Trust and A2 Dominion - are issuing notices to tenants warning them they could be evicted due to welfare reforms.

Newlon Housing Trust is pulling out of managing temporary accommodation due to fears of shortfalls in rent. It has sent a letter to tenants saying: ‘We are in the process of preparing the court papers for all temporary housing tenants so that if we need to return the property to the owner we will be in a position to do so.’

Giles Peaker, partner at Anthony Gold solicitors, warned tenants could have a defence under article 8 of the Human Rights Act on the grounds Newlon’s actions are not proportionate. He said: ‘These are pre-emptive and speculative proceedings.’

Genesis last month sent letters to 57 families in temporary accommodation in the north London borough of Haringey which, along with Enfield, Bromley and Croydon, has been trialling the benefit cap since 15 April. The cap
will be extended across Britain by the end of September.

The Genesis letter said: ‘In view of the [welfare] changes, Genesis will now need to start legal proceedings… as we may need to terminate our lease with the property owner early.’

The organisation has since apologised for the tone of the letters, which did not make it clear that tenants who pay their rent will not be evicted.

Teresa Richardson, assistant director at the National Housing Federation, said associations have to subsidise private landlords if tenants fall behind with rent payments. However, she added: ‘Evicting people is the last
thing housing associations want to do.’

Benefit caps

weekly cap for couples and lone parents

weekly cap for single person households

£265 million
estimated annual saving to the taxpayer by 2014/15

15 July
start of national roll-out of benefit cap

Readers' comments (3)

  • The impact of the benefit cap on temporary accommodation hasn't been widely appreciated as yet. Most councils will probably indemnify providers of TA for them, who are unable to get Housing Benefit any more. But there is no way of meeting the shortfall and it will fall on the Council's finances. Pretty much all temporary accommodation is rented out at LHA limits, which is the maximum for which HB can be received (for councils as well as private landlords), and councils often still make a loss because the costs of procurement and administration are higher than permitted.

    I assume from the story that Haringey are not prepared to bear the cost of shortfalls, and housing associations therefore have little choice but to refuse to house homeless households subject to the benefit cap. There is no way this money is going to be collectable, and despite the government's crocodile tears there is no solution for many of these families except relocation a long way outside London.

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  • Housing associations have been doing this for years. This is nothing new. And what did people expect was going to happen as a result of the Benefit Cap? That housing associations would make a loss on their private leasing schemes! Why is everyone so surprised?

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  • Trevor Galley

    With the best of intentions lets not forget this Govt gave a commitment to minimise the time families with children live in B&B and temp accom. However, the London Boroughs and Haringey Council in particular face a huge challenge as will landlords in the private sector (Their rents being higher) more to lose despite their invest and improvement costs and loss of a return on their investment.

    I agree its still early in the day. However, any smart thinking organisation large or small, charity or not will have to undertake a risk assessment (if it has not already done so) and will be reviewing existing contracts and business plans. This may well regrettably mean putting the business case for change and pulling out of accommodation and perhaps some support provisions etc. Landlords/Housing associations - Councils etc may therefore have little choice but to refuse to house homeless households subject to the benefit cap.

    The Labour govt failed to remedy the issue of Temp accom - but put an accountant in charge of policy (the Chancellor) and you get change!

    Its the smart thing to do and another challenge to an ill thought through knee jerk policy change from a coalition Govt we did not vote for and one out of touch with the realities of modern life or the real professionals managing and working in the sector on another note well done to Nat Fed re changes to the Care Bill and getting someone to listen.

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