HCA to launch investigation into welfare cuts

The Homes and Communities Agency, the regulator of social landlords in England is to launch an investigation into the welfare cuts that are to be announced in the government’s budgets on 8th of July. This step is being taken because the welfare cuts to be announced will impact housing associations and the HCA’s aim through this investigation is to determine which types of social landlords will be affected by this change. It is reported that the HCA will conduct a review and is likely to contact housing associations it believes are vulnerable to seek assurances that they are able to cope with the changes that are coming.

During the Chartered Institute of Housing Conference in Manchester last week, the topic of welfare cuts and their impact on tenants and housing associations was high on the agenda. Research by Sheffield Hallam University into the pilot Direct Payment Project revealed that the changes in paying housing benefits directly to tenants carry financial risks for tenants and landlords. In financial terms, there were underpayments causing arrears and erratic payment patterns, which had an impact on the financial situation of housing associations. In addition, dealing with these issues meant that there were costs for housing association’s and a need to change their culture and response methods.

With £12 billion worth of savings to be made in welfare, other than the overall cap on benefits per household being reduced and the removal of housing benefit for 18-21 year olds, it remains unclear where the cuts will fall. Within the housing sector there is speculation that the overall cap may be reduced further, the Consumer Price Index (CPI) +1% rent formula, which is in place until 2026 may be altered or that tenants may be asked to top up their housing benefit to cover rent.

According to government statistics, there are 1.9 million tenants who are claiming on average £90.81 of housing benefit per week. In a year the housing benefit bill amounts to £9 billion and a 10% cut of that will mean housing associations will be affected by £900 million a year.

In its Sector Risk Profile, the HCA has referred to welfare changes as one of the areas that housing associations should monitor and plan accordingly. Nevertheless, it is important that the HCA conducts such a review to assist housing associations in this transition. Although, a spokesperson for the HCA has indicated that as the regulator monitors the budget announcements, it expects provider’s boards to do the same so that they prepare for the changes.

Forbes Solicitors is experienced in assisting housing associations in a range of matters. If you would like advice on preparing for this change or any other regulatory matter, please contact Daniel Milnes.

Nat Avdiu

About Nat Avdiu

Nat Avdiu is a Paralegal in the Contracts and Projects team at Forbes Solicitors. Nat provides updates for clients on a range of issues including: governance, data protection and freedom of information, procurement and charity law.
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