Community Housing Cymru (CHC) has undertaken analysis which demonstrates that if the UK Government applies the Local Housing Allowance (LHA) cap to social housing from April 2019, it will make social housing unaffordable for those who it was intended for.
The membership body for Welsh housing associations have also warned that the policy has the potential to jeopardise future investment in new and existing homes.
CHC has voiced concern about the policy’s potential to cause long-lasting hardship. Its analysis of Welsh Government data shows that the LHA cap, which has been frozen for 4 years, has resulted in:
- LHA rates seriously misaligned with the reality of the rental market. Over 60 percent of LHA rates are set below the lowest third of local market rent
- Less than 10 percent of the private rented sector is accessible to people claiming housing benefit in some areas of Wales
- A postcode lottery: significant shortfalls between LHA and social housing rents in Wales, with tenants hardest hit in the valleys and in rural areas
- For example: A tenant living in a one bed property in Cardiff is unlikely to have a shortfall between the LHA rate and their rent; however, someone living in a similar property in Powys will experience a £15 per week shortfall
The data has also drawn attention to the small sample sizes used to calculate the LHA rate in Wales, which significantly reduce the likelihood that the rates for the lowest third is representative of the wider rental market:
- In Carmarthenshire, the Shared Accommodation Rate (SAR) is based on a sample of just 21 rents: only 3 of the 21 rents sampled are affordable
- In Cardiff, Flintshire, Neath Port Talbot, North West Wales and Pembrokeshire, tenants in receipt of SAR are only receiving enough housing benefit to access the bottom 10% of the rental market
Stuart Ropke, CHC’s Chief Executive, said “This flawed policy will make social housing unaffordable for those it was built for and for those who need it most. Tenants face a postcode lottery where, for example, in Neath Port Talbot, they’ll only be able to afford to access the bottom 2% of the market. Our research also proves that the poorest areas in Wales will face the highest shortfalls under this policy, further entrenching poverty in many Welsh communities and reiterating why this policy is a devastating move for tenants across Wales.
Our members are working with Welsh Government to build at least 12,500 homes by 2021, but this unfair policy will put many current homes and many of these new homes out of reach. We are urging Welsh Government to apply pressure on the UK Government to reverse this policy which threatens to undermine all our devolved housing policies here in Wales. 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.”
Read the full report here.