As things stand, the 1% rent reduction does apply to supported housing and it is our understanding that the term rent, under the relevant legislation does include service charges.
Over recent weeks we have been working hard with partners and members to unpick a terminological turmoil – made ever more complicated by increasing use of different descriptors to define the world of supported housing.
Unravelling the terminology
Specialised Supported Housing – This is the group of accommodation that has been suggested might be exempt from the rent reduction. The reasoning behind this is that it is already exempt from the Rent Standard. Our understanding is that this definition applies to a very small section of the supported housing sector, and amounts to not much more than 10,000 units. The full definition of Specialised Supported Housing can be found in our web briefing. This is the exemption that recent housing press articles have been talking about. It in no way exempts the rest of the sector.
Specified accommodation – Seeking an exemption – Sitra has been working with a broad range of partners, led by Homeless Link. We are asking for an amendment to the legislation seeking exemption to the rent reduction for all accommodation that meets the definition of specified accommodation. This definition was developed and enshrined in legislation under the Housing Benefit and Universal Credit (Supported Accommodation)(Amendment) Regulations 2014 A detailed briefing has been produced and a full copy of this can be found here. Please read it and take any local action you can to raise this issue with your own MP.
Service Charges – In or Out? There is significant confusion around this issue, and the ultimate answer is that no one can definitely say they are not included in the rent reduction. Our interpretation of the legislation would suggest that services charges are a constituent part of 2008 definition of rent. (the reference point incorporated in the Welfare Reform and Work Bill). Therefore we have been asking our membership to provide detailed understanding of how the inclusion of service charges within the rent reduction will affect costs. Please ensure that the modelling you are doing internally recognises the potential for service charges to be included in the reduction. If, of course, there is further clarity and cast iron assurance that it is not in there, then we will share that, but right now we are urging consideration of this issue in your preparations. We have drawn out this issue in more detail in our recent briefing which can be found here.
We have been gathering views from members, and it is clear that there are huge ramifications for the sector as a whole. This impacts on existing schemes and plans for the future development of supported housing. If you have been thinking through what this means for your service(s), we have a brief questionnaire for you to complete, contact firstname.lastname@example.org for details.
If you are happy to share your thinking process with Sitra, we will ensure that it is included in our analysis, and will continue to update and alert government of the implications. Please also ensure that you use opportunities to influence at a local level.
There is a very short time frame for any amendments to the Welfare Reform and Work Bill and we know that without an exemption for specified accommodation, the impact on future provision of supported housing will be huge.