SSC/S5/19/SSH/12 SOCIAL SECURITY COMMITTEE SOCIAL SECURITY SUPPORT FOR HOUSING SUBMISSION FROM SHELTER SCOTLAND Introduction Shelter Scotland welcomes the opportunity to respond to the Social Security Committee‟s call for views on how social security support for housing costs is impacting clients, with particular focus on the impact of welfare reform. Every day we support people struggling with housing costs and affordability was the top reason people came to us for help last year. Shelter Scotland is Scotland‟s national housing and homelessness charity. We are here so that no-one has to face bad housing or homelessness alone. In 2017/18 Shelter Scotland helped over 21,000 people through our housing advice and support services across Scotland – more than ever before. Along with our national helpline and local projects, we operate four community hubs across Scotland which offer clients support and advice in Scotland‟s major cities; Glasgow, Edinburgh, Dundee and Aberdeen. Adequate social security, in addition to the supply of affordable homes, is key in helping people to affordably access and sustain their homes, but welfare reform has pared back support for housing costs to the point where many households cannot sustain their tenancies. Mitigation measures and recent developments around Universal Credit (UC) have been helpful, but they are sticking plasters for systemic problems in a system which urgently needs to be reviewed on a number of fronts. Overall, we believe that social security support for housing costs must be more generous to accurately reflect the cost of housing: The freeze on LHA must be lifted in 2020, and at an absolute minimum, be set at the 30th percentile of local rents. A review into what the administrative level LHA rates are set at would be helpful, to determine if a different measure to Broad Market Rental Areas (BRMAs) might be more appropriate. The LHA shared room rate age of 35 should be removed as it is an arbitrary restriction, and this would allow young people a wider choice in their housing options. The benefit cap should be lifted, as it is directly leading to homelessness, especially among families on low incomes Universal Credit administrative issues including the five week wait should be addressed, as this long period before the first payment is extremely difficult for many households to manage. 1 SSC/S5/19/SSH/12 These steps, alongside a sustained programme of affordable home building, will support people to access and stay in safe, affordable and decent homes. Response to questions 1) How have changes to the Local Housing Allowance impacted on the private rented sector, particularly for the affordability of rents for young people? The scale of this problem is significant: the private rented sector in Scotland is growing and it is now home to 15% of households in Scotland, up from 5% in 19991. It is increasingly seen to play a role in accommodating lower income households, including those in receipt of benefits; approximately a fifth of private renters in Scotland receive help to pay their housing costs through Housing Benefit2. Several aspects of UK Government welfare reform have changed how LHA rates are calculated: 2011: LHA rates were changed to the 30th percentile of local rents rather than the 50th. 2012: the age to which the 'shared accommodation rate' (SAR) applies was changed from under 25s to under 35s, thereby covering a larger group. 2013: the direct link between local rents and LHA rates was broken with a change meaning LHA rates were to be uprated by the Consumer Price Index (CPI). 2016: LHA rates were frozen for 4 years, meaning they no longer take account of increases in market rent levels, although extra 'targeted affordability funding' is available in parts of England and Wales. The expected unfreeze to LHA in 2020 will be the first step towards making LHA work for tenants, it is essential that the freeze is lifted and that LHA rates cover a minimum of the 30th percentile of local rents. The freeze to LHA over the last four years has had a considerable impact on the properties people on low incomes are able to afford, and how much income they have remaining after housing costs. In terms of possible Scottish solutions, shortfalls between LHA and rents in England have been partially dealt with by the introduction of Targeted Affordability Funding (TAF). This is limited in its impact as it can only uplift LHA rates by a maximum of 3%, and only applies in areas where the LHA rate covers the smallest percentage of the rental market. As such, we feel it would have limited use if it were to be introduced in Scotland. Lifting the freeze on LHA is not enough on its own. It could be argued that the use of Broad Rental Market Areas (BRMAs) as the administration levels for setting LHA rates is flawed and outdated. The Lothian BRMA is a perfect example of this, and the issue is 1 Scottish Government (2018); Scottish Household Survey 2017 annual report 2 Shelter Scotland (2017); „No DSS‟: A review of evidence on landlord and letting agent attitudes to tenants who receive Housing Benefit 2 SSC/S5/19/SSH/12 summed up well by research commissioned by Shelter Scotland in 20183, that “…the large size of BRMAs has always caused major problems within high rent pockets in otherwise low market areas.” Rent in Edinburgh is considerably higher than other areas included in the Lothians region, meaning that the LHA level is skewed by this mixture of data. This, in turn, means that many households in Edinburgh are not given adequate support towards their housing costs. We suggest that reviewing what administrative level LHA rates are set at would be a helpful exercise, and suggest that a local authority level may be a more appropriate alternative. Case study We recently worked with a woman under 35 who was on a Short Assured Tenancy and whose rent increased every six months. Her property was one of the few suitable ones in a limited private rented market area. She did not know anyone that she could comfortably agree to share a rental property with after recently enduring a relationship breakdown and feeling vulnerable. Meanwhile, the gap between her rent and her LHA continued to grow as she was only entitled to the shared room rate of LHA. People aged under 35 are now only able to access the shared room rate of LHA, meaning therefore that they are likely to have to find someone to live with in order to make up the full rent. This change limits young peoples‟ housing options, people might struggle to find someone to live with, and shouldn‟t be pushed towards shared living as their only option. Further, Shelter Scotland work with parents who share custody of children but who can only access either the shared room or one bedroom rate of LHA despite requiring a spare bedroom for when children visit. This means that they have limited options when their children stay, and in some circumstances makes having their children to stay impossible. 2) To what extent have UK welfare reform measures impacted on private landlords’ willingness to let to those in receipt of social security benefits? (Including for example, the impact of Universal Credit, the benefit freeze and the benefit cap). In 2017 Shelter Scotland commissioned research into the prevalence of, and reasons behind, negative landlord attitudes to renters who receive Housing Benefit4. There is strong evidence that a majority of landlords prefer not to let to tenants who are in receipt of Housing Benefit or are out of work. Two thirds of private landlords would prefer not to let to tenants who claim Housing Benefit, in a climate where around 1 in 5 private renter households are claiming Housing Benefit to assist with their housing costs. 3 Robertson, D. and Young, G. (2018); An Evaluation of Rent Regulation Measures within Scotland‟s Private Rented Sector: A report to Shelter Scotland 4 Shelter Scotland (2017); „No DSS‟: A review of evidence on landlord and letting agent attitudes to tenants who receive Housing Benefit 3 SSC/S5/19/SSH/12 The main reasons cited by landlords for not accepting tenants in receipt of Housing Benefit are: problems with the level of Housing Benefit problems with the administration of Housing Benefit policies used by mortgage lenders and insurers the wider regulatory context in which landlords operate beliefs about claimants (including stigma and past experiences) Shelter Scotland regards „No DSS‟ policies as a significant issue for many private renters in Scotland. Worryingly, our research shows that this trend appears to be rising. The proportion of landlords and letting agents unwilling or preferring not to let to this group appears to be increasing following a programme of welfare reform and benefit freezes since 2010. The Westminster-led welfare reform programme has dramatically reduced the capacity of those in receipt of Housing Benefit to afford PRS tenancies, fueling the view that letting to 5 this group is a high-risk strategy for landlords (Beatty et al, 2014). Similarly, it appears that some landlords have become more reluctant to let to tenants navigating a new benefits system with several teething problems. These research findings have been reflected by anecdotal evidence from Shelter Scotland‟s engagement with letting agents – through Shelter Scotland‟s Oak Foundation-funded Letting Agent Plus Project.6 Partner agents involved in these discussions generally disagreed with operating blanket „No DSS‟ policies. However, agents acknowledged that they need to respect landlords wishes, which often included a preference against renting to people in receipt of Housing Benefit and a ban on „No DSS‟ adverts would not necessarily stop landlords from discriminating – this could be done later on once checks are made.