Housing benefit changes could ‘reduce affordable house-building’

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New HousesThe House of Commons Committee of Public Accounts report, published today, concludes that the introduction of direct payments of housing benefit to tenants living in social housing could lead to an increase in rent arrears that would leave social landlords with less money to build new homes.

“There is a risk that the introduction of direct payments of housing benefit to tenants living in social housing could lead to an increase in rent arrears and evictions,” the report says.

It adds that an increase in arrears could “reduce the funds available for social landlords to maintain existing homes and invest in new homes”.

The report says that the committee had been told by housing association L&Q that it had doubled its provision for bad debts from 3.5 per cent to 7 per cent in preparation for a possible increase in arrears, and that the association now expects to reduce the number of homes it can build annually by 80 to 920.

The government announced measures in the Emergency Budget of June 2010 and the Spending Review of October 2010 aimed at altering the housing benefit system to reduce annual expenditure. The changes included reductions in the rates paid for private rented sector housing and deductions in payments to social sector tenants in under-occupied homes. Under-occupied homes are defined as homes in which there is more than one bedroom for each person or couple living as part of the household, with children under the age of 15 being expected to share with one other child of the same gender, and children under the age of 9 being expected to share with one other child aged nine or under, regardless of gender. The alterations bring under-occupation rules for social sector claimants in line with the rules for private rented sector claimants.

The MPs’ report said that the Department for Work and Pensions was introducing the changes “without comprehensive modelling of the likely outcome on individuals or on housing supply”.

It added: “The changes to housing benefit could have an adverse impact on levels of homelessness. Social landlords told us that they expected evictions to rise because some households would not make the behavioural changes needed to respond to housing benefit reforms.

National Housing Federation chief executive David Orr said: “That the Government is bringing in these housing benefit changes without knowing the full consequence on the vulnerable people affected is worrying and irresponsible.

“Most residents who will be affected have little choice of action. In most areas, there just aren’t enough smaller affordable homes for these families to move into to avoid the tax. And disabled people are unable to easily move as their homes are adapted for their needs. Against a backdrop of rising homelessness, we ask the Government again to rethink this ill-conceived policy.”

SOURCE – http://www.planningresource.co.uk/news/1176267/mps-housing-benefit-changes-reduce-affordable-housebuilding/

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