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Social Housing Speed Read – the Local Housing Allowance cap

We look at the impact of the most recent comments from the Department of Work and Pensions ('DWP') relating to the impending application of the Local Housing Allowance ('LHA') cap and the scope of tenants that will be affected.

What has been said?

The introduction of the LHA cap is a cause of financial concern to Registered Providers and one to watch on a regular basis. The most recent revelation, centring on its application and scope, was made this week at the National Housing Federation’s annual conference on 21 September when Darrell Smith, the Housing Policy Manager at DWP confirmed, “for all supported housing residents from April 2019, [the cap] will apply to everybody…”.

This was an apparent switch in policy, as previous indications were that the cap would only apply to new tenants, Darrell Smith was quick to qualify his statement by confirming this decision was taken by the department due to the perceived difficulties they would face in running two schemes, for two categories of tenants, in tandem.

How does this differ to previous Government policy?

Some may question if this approach of the LHA cap applying ‘across the board’ to all tenants was clearly set out in the Government’s Autumn Statement and others may even argue its express and sole provision to new tenants was proffered.

However, Darrell Smith has clearly set out the Government’s position and quashed any question of the LHA cap applying only to new tenants by confirming, “that’s not what the Chancellor announced in the Autumn Statement…the plan for supported housing is that it applies to everybody…”.

It clearly broadens the reach of the LHA cap, meaning that effectively all social housing tenants will be affected. The precise implications of this approach taken by DWP are obviously unknown at this stage.

However, some commentators have suggested that the extension could call into question the sustainability of current housing schemes.

What has been the reaction?

This latest positioning of the LHA cap and its application has been met with a certain level of surprise from organisations within the sector, as previous proposals seem to suggest that the scope of the LHA cap would be limited to new tenants.

It’s likely the sector will react to this negatively, given they have already been looking into ways to reduce the LHA cap’s impact by, for example, leasing their supported housing to non-registered subsidiaries.

We must also not forget the campaigning for the Government to confirm any applicable exemptions to the LHA cap. Although the Prime Minister has confirmed within the last couple of weeks that the LHA cap will no longer apply to women’s refuges, we have yet to receive confirmation of any other exemptions to apply to, for instance, homeless refuges.

It seems this is very much a live issue and one to watch as we approach the implementation date.

If you have any questions on the Local Housing Allowance and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact John Murray or a member of our expert Social Housing Team.

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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