UK Government plans to cap Housing Benefit for new tenants could result in the mass closure of supported housing, experts have warned.

Housing groups are anxiously lobbying the Government to reconsider proposals to cap Housing Benefit for new tenants in supported housing at Local Housing Allowance (LHA) rates.

Supported housing provides specialist accommodation for older people, the mentally ill and people with disabilities.

Experts warn that the LHA rate is insufficient to meet the housing costs of tenants in supported housing, and could leave schemes on the brink of collapse or only open to wealthier tenants.

Chancellor George Osborne announced the cap in the Autumn Budget, which doesn’t come into full force until 2018 but still applies to new tenants from April 2016.

Around half of housing associations and social landlords provide supported housing, with 110,665 new tenancies granted in 2014/15. However, news of the new cap has resulted in supporting housing providers placing a hold on new developments.

Source: Flickr.
Source: Flickr.

Jenny Allen, policy leader at the National Housing Federation, told the website Inside Housing: “This is an issue of critical importance, with some schemes already on hold. We are continuing to press this with officials and ministers.”

Andrew Redfern, chief executive of specialist housing association Framework, warned that the cap “would mean the end of supported housing”.

“All our schemes would close, and I think all others would as well”, he said.

Kevin Beirne, group director of housing care and support at One Housing Group, said plans to build 520 extra care homes would have to be “mothballed”.

Earlier research by the Placeshappers group of housing associations estimated that the housing cap would leave a £400million black-hole in the funding of supported housing.

The Government has offered to increase Discretionary Housing Payment budgets by a total of £140million between 2018 and 2020. However, social landlords claim that this amount would not be enough to close the funding gap.

Last edited at 02:10 on 16 January 2016.