Wednesday, 20 February 2013

Benefits Changes/ Housing related

I wrote this for some friends Date 26 Jul 2011 
Subject: Housing

There are many different issues around the provision of social housing. I will show ONE aspect of operational issues currently in this piece.

Currently Social Housing is provided by “Registered Providers” and it is a highly regulated sector within housing.

Within that, people should be provided with a Decent Home, and a lot of Social Housing stock still doesn’t meet the Decent Homes Standards.

So Providers seek finance when taking on stock. Providers have Lenders feasibility issues and proofs to provide in order to gain finance to provide homes - based usually on a 30 yr business plan. This must build in any Investment and Improvements requirements.

This business plan and finance is not affected directly by Government policy in theory. Loan, Rent, Repay. Very structured.

However, providers understand that typically they have a needs group of tenants that is indeed different than any other sector in housing and high proportions of these tenants may be dependent on Government Assistance with their housing cost – Housing benefit.

To recap “The Lending” is based on the Registered Provider submitting sustainable business plans and income forecasts.

When Government decides to change Housing benefits this start a cascade of concern within Registered Providers and could POSSIBLY end up eventually at the feet of the Lenders.

There is currently a huge void in understanding what the financial impact of proposed government changes will be. Impact Scenarios are being constructed within most Housing Providers.

Some concerns become detailed : Under occupation is now a huge concern. Where do they go to? Are there properties available? Do they move? This is part of a huge set of concerns that the Provider must address.

*Rent shortfalls due to benefits changes will affect services to all tenants. *

So now more than ever Value for money in every aspect of operation is now more important than before.

Most people in Social Housing Provision ,and even a lot of tenants too, do not want the Universal Credit proposals to happen where Housing Benefit is paid to the Tenant. There will be an increased rent income risk caused by this.   

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