Report based on survey of English housing associations and councils suggests government moves to restrict benefits will result in a surge in tenant evictions
Social landlords are expecting a surge in rent arrears, tenant evictions and homelessness as the government pushes ahead with more welfare cuts and changes, according to new research.
The continuing impact of the bedroom tax, together with moves to extend the benefit cap and impose further limits on housing benefit, will put further financial pressure on tenants, predicts a report by consultants Grant Thornton. It concludes that the ability of councils and housing associations to mitigate growing arrears has been severely eroded, and increasing numbers are issuing possession orders to tenants who have fallen behind with the rent.
Grant Thornton’s survey of English housing associations and local authorities revealed that a majority had seen a rise in average rent arrears over the past two years, with over a fifth reporting a “sharp increase” in eviction notices being served.
Last week, official statistics showed that tenant evictions reached a six-year high in the first three months of 2015. Over the same period, social landlords made 27,000 possession claims – the first stage in the legal process leading to an eviction. Councils are also feeling the strain of increased evictions in the private rented sector, with 59% reporting an increase in applications for social housing from tenants who had been ejected by private landlords.
The threat of further evictions will rise after a cut in the budget for discretionary housing payments (DHP) from £165m to £125m this year, the report says. DHP grants, which help tenants with rent shortfalls caused by welfare reform, were originally intended as a temporary measure to enable tenants to stay in their home while they got a job or arranged a move to a smaller property.
However, 95% of social landlords surveyed said that most DHP claimants were partly or mostly dependent on the payments to meet rent in the long term. The grants were all that stood between tenants and eviction. “Any proposed reduction in DHP funding from central government is therefore likely to result in increasing rent arrears and homelessness in the next two years, unless it is compensated by other means,” the report concludes.
Although many councils and housing associations had developed innovative projects to help tenants affected by welfare reform by offering debt counselling or employment advice, these were now under threat from wider funding squeezes.
The bedroom tax has failed to persuade social tenants to move to cheaper homes, the report finds. Social landlords reported that it was “rare” for more than 10% of affected tenants to have moved as a result of the policy, not least because of the national shortage of smaller affordable homes for them to move to.
Four-fifths of local authorities reported an increase in applications for emergency hardship funds available to local residents who face destitution through domestic violence, homelessness, flooding or unexpected financial crises. Four out of 10 councils said they had provided local welfare assistance as a direct result of benefit delays or sanctions.
In February, the coalition U-turned on plans to scrap local welfare assistance funding from April, instead providing £74m for this year. But, if the Conservatives withdraw the funding from 2016, a quarter of authorities said they would be unable to offer any service at all.
The report also warns that councils should not assume that charities can take the strain of providing hardship support. “There is increasing anecdotal evidence that third sector providers, such as food banks, are already at full capacity in some areas,” it says.
The findings are based on a survey of 75 local authorities and housing associations in England, coupled with detailed discussions with senior council and housing officers.
Read the DWP’s response here: http://www.theguardian.com/society/2015/may/17/social-landlords-expect-cuts-to-trigger-new-wave-of-homelessness?