Future for temporary accommodation funding. Chartered Institue of Housing 14 & 20 May 2015

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1 Future for temporary accommodation funding Chartered Institue of Housing 14 & 20 May 2015

2 Overview Used of temporary accommodation Numbers in temporary accommodation Use of B&B and the Gold Standard Using private rented tenancies Private sector leasing Temporary accommodation subsidy system Household benefit cap

3 Use of temporary accommodation Shelter's June 2004 report, Living in Limbo, which was based on a survey of more than 400 homeless households living in temporary accommodation in England, estimated that temporary accommodation was costing the taxpayer over 500m each year at that time: 300m on higher rents and additional housing benefit costs 90m on additional take up of out-of-work benefits 50m on out of school provision for children 30m on additional take up of sickness benefits 10m on additional visits to the GP due to health problems

4 Use of temporary accommodation Following a series of freedom of information requests the Bureau of Investigative Journalism reported that Westminster Council would spend 41.8m housing families in temporary accommodation in 2013/14 Cuts to housing benefit are having a reverse effect on costs for Westminster Council, which predicted its bill for homelessness would rise 63.5% from 2013 to 2014 when temporary accommodation cost the council 25.5m

5 Numbers in temporary accommodation May 2012, DCLG announced an additional 70m investment in response to increasing numbers of households in temporary accommodation, including an increase in households placed in another local authority's area. September 2013 Westminster Council faced criticism from the Local Government Ombudsman for keeping around 40 families in B&B for longer than six weeks. Westminster offered to pay the affected families 500 each.

6 Homelessness Order 2003 the Gold Standard December 2002, ODPM announced 350k to finance new services for homeless families placed in temporary accommodation to help resettle into permanent housing. DCLG launched a 1.7m 'Gold Standard' approach to tackling homelessness. June 2014, DCLG announced 582k to extend the Homelessness Gold Standard scheme into 2014 to 2015.

7 Using private rented tenancies DCLG funded a review into whether there is appetite among investors to finance housing let at Local Housing Allowance (LHA) rates in A potential model would involve a council setting up a company to buy private housing using institutional finance - the properties would be let at to homeless households at the LHA rate with the investor receiving a return through the rental income. A series of pilot projects have reportedly been commissioned. Authorities are also considering the direct purchase of private homes using money borrowed from the Public Works Loans Board - this option would count as public sector borrowing.

8 Private sector leasing Under the prudential capital finance system (introduced by the Local Government Act 2003) local authorities are free to borrow without Government consent, provided they can service the debt without extra Government support. There is no need for special concessions relating to property owned by private landlords where that property is used to accommodate households owed a duty under part 7. For households placed in non self-contained accommodation (board and lodging or licensed), HB subsidy is limited to the 1 bedroom self-contained LHA rate based on the location of the property. For those in self-contained licensed and short-term leased accommodation, the maximum HB subsidy is determined by using 90% of the LHA rate for the size of property plus an element for the management costs. Subsidy scheme includes cases in housing association leasing schemes and other similar types of temporary accommodation. LHA rates used in the formula to calculate the subsidy fixed at the January 2011 rates.

9 Temporary accommodation subsidy system UC claimants housed in temporary accommodation will receive their housing support as part of their UC. This will be still based on the appropriate LHA rate for the household. The management element for temporary accommodation cases in UC will be separated out and paid directly to LAs in order to protect this funding stream. DWP are still considering how the separate the management element will be paid for UC claimants. Their preferred option is provide additional funding through top-up to LAs DHP pots with a mechanism to reflect changes in local caseloads. This intended to be an interim solution to protect provision and LA funding. DWP are looking to work with stakeholders and other Government departments on a long term solution. Under UC the amount the amount councils will be able to claim where they use their own stock as temporary accommodation will be restricted to the LHA rate plus 45 per week

10 Household benefit cap The overall benefit cap does apply to households in temporary accommodation. In some cases in London HB entitlement is reduced to 50p per week meaning that their is no tenure or part of the country that would provide affordable accommodation and consequently no reasonable housing offer can be made to them by the local authority. If it is assumed that 4,600 London capped households in TA loose 105 per week, London local authorities would face an additional non-recoupable financial burden of more than 25m, equal to about half the savings the overall benefit cap is expected to produce in London.

11 Conclusions Use of temporary accommodation continues to be one the most significant expenses for local authorities when fulfilling statutory duties. The numbers of households in temporary accommodation is likely to continue to increase. Action will continue to be taken against local authorities who fail to comply with the Homelessness (Suitability of Accommodation) (England) Order Bringing the main homelessness duty to an end by using private rented tenancies will help to reduce to levels and length of stay in temporary accommodation. Strategic commissioning of private sector accommodation will help to restore some pricing equilibrium. Further changes can be expected to the temporary accommodation subsidy system. Exemptions to the overall benefit cap should be applied to household living in temporary accommodation.

12 Expert advice and training on homelessness, housing needs and lettings