Rent will be problematic for young single claimants
Tenancies signed after 1 April 2016 will be problematic for single claimants aged under 35 without dependent children
Under Local Housing Allowance rules, single under 35s without dependent children are generally only allowed to claim housing benefit to cover the costs of a room in a shared house – known as the shared accommodation rate (SAR). Currently social renters face no such restriction, but come 2018 the SAR will kick in to the social sector.
Northampton SAR is £66.32
Shelter looks at the Impact on young people
It’s this group who we expect to be most affected by the policy. We’re still waiting for an official DWP impact assessment but our initial assessment is that the losses for some under 35s will be deep and hard to bridge. Shelter looked at existing housing benefit award data and found that the vast majority (82%) of existing awards for single, childless under 35s in England are over the relevant SAR limit, meaning their housing benefit could be cut. And for a significant proportion of these households (45%) the difference between the existing award and SAR cap is more than £20 a week, a sum that someone on a very low income would struggle to make up.
This is based on average awards and it may be that some claims are distorted by under-occupation or the higher cost of supported housing. In some areas one bed social rents may indeed be in line with the cost of a room in a private flat share. But in others the SAR cap will mean that LHA will fall far short of people’s existing rents. For example, Savills estimates that the average one bed social rent in Birmingham is £76 per week – compared to the SAR for the city of just £57.
It’s unclear how DWP expect landlords and tenants to adapt to this new regime. As a first step landlords will have to compare their one bed rents with the local SAR to assess just how steep the shortfall is. In areas with a large gap the options look stark:
- Perhaps the government expects social landlords to adapt and move their tenants into shared housing. This is uncharted territory for many landlords and would undoubtedly create management challenges – not least around allocations. It would also risk cannibalising larger homes that could have been let to families.
- Landlords may reconsider whether they let to single under 35s without children at all. This would be an extreme outcome from a cut billed as a tidying up exercise.
But with all tenancies signed from this April in scope for the new regime, landlords don’t have long to decide how to manage the risk.