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Meeting the challenge

The threat of the LHA cap may have gone away for now but social housing in parts of the Valleys still faces a structural problems. Victoria Winckler puts the report on housing for people on low incomes in context.

Remember 2015? David Cameron was prime minister, George Osborne was chancellor and Brexit was no more than legislation on a possible referendum rather than a reality.

It was also the year that brought one of the biggest threats to social housing yet – the extension of the Local Housing Allowance (LHA) cap to social housing tenants.  Initially due to take effect from April 2018 and then deferred to April 2019, the cap would have not only made it impossible for social housing tenants reliant on benefit to pay their rents but also challenged the business model of some social landlords. The Joseph Rowntree Foundation (JRF), with whom the Bevan Foundation has a four-year partnership, commissioned a team at Sheffield Hallam University to find some solutions.

Shortly after the team began their work, the plans to extend the cap were dropped in October 2017. But that wasn’t the end of the project, because although the threat had gone – at least for the time being – the possibility of extending the cap had highlighted a previously-ignored problem, namely the affordability of social housing especially where housing demand is relatively low.

Where housing demand is low, as it is in much of the South Wales valleys, house prices for owner-occupied housing and rents in the private sector are only marginally above rents in social housing. For example, the cost of buying an average home in Blaenau Gwent is only £94 a week while a two-bed private sector property in the lower-quartile costs £80.20 a week. Compare these figures with the £74.53 average social rent for a two-bed home in Blaenau Gwent. On the face of it, this looks like good news for home-seekers in that they have a genuine choice between tenures.

But look a bit deeper and it is not such good news. Despite the relatively low costs of social housing, the research team showed that social housing is unaffordable – as measured by the ratio of rent to income – for a significant minority of households in the valleys. This means that not only do some tenants struggle to pay their rents, but social landlords struggle to find tenants unless they set rents so low that their whole business model falls apart. In other words, there is a structural problem in the social housing model in areas of low housing demand, even without the pressure of extending the LHA cap.

The study went beyond analysing the problem, however. The research team have developed some interesting solutions through engaging with a wide range of stakeholders and with tenants themselves.  Some of them involve changing how housing is considered in South East Wales, including ensuring a more strategic approach is taken within the Cardiff City Region and across the valleys themselves. Others relate to tweaking funding mechanisms, including changing how social housing grant is used, changing arrangements for Local Housing Allowance and making rents more responsive to household incomes. There are also proposals to increase help for people to boost their incomes, for example through employment, and to cut their other housing costs such as  fuel bills. Taken together, there’s a good prospect that this package of measures will ensure that the housing needs of people in the Valleys are met not just now but in the future.

The urgency that came with extending the LHA cap to social housing may have gone, but the challenge to tenants and social landlords alike has not. If the Welsh Government was serious when it said in Prosperity for Allpaper that ‘[w]e want everyone to live in a home that meets their needs and supports a healthy, successful and prosperous life’ it will act on these recommendations very quickly.

Victoria Winckler is director of the Bevan Foundation and chaired the project advisory group

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