Changes to Supported Housing funding

Posted by Holly Stedman on
The Department of Work and Pensions announced a revised model for funding for supported housing on 15th September 2016.

Supported Housing

Supported housing will be exempt from the local housing allowance (LHA) cap until 2019/20.  

From 2019/20, core rent and service charges for all supported housing tenants (not just new tenancies) will be funded through Housing Benefit or Universal Credit up to the level of the LHA rate.xempt from LHA cap

How to deal with costs above the level of the LHA rate?

In England, local authorities will provide additional "top up" funding to providers where necessary.

This will give local authorities an enhanced role in commissioning supported housing in their area. In Wales, any shortfall will be made up via a developed top up fund to cover the cost of additional support.

The Shared Accommodation Rate will not apply to people living in the supported housing sector.

The one-bedroom LHA rate will be used for people under 35 living in supported housing.


Time will tell if the local authority top up funds are sufficient to ensure supported housing can be provided to those in need.

However given the uncertainty here the government's announcement has done little to provide confidence to social landlords' boards to invest in vitally required supported housing and boards must remain cautious.

Rent reduction in England

Providers of supported housing, in England, are being required to make efficiency savings in the same way as the rest of the social sector. Therefore the Government will apply the rent reduction to supporting housing with rents in these properties decreasing by 1% a year for 3 years, up to and including 2019/20.

The existing exemption for specialised supported housing will remain in place and will be extended over the remaining 3 years of the policy for fully mutual/co-operatives, alms houses and Community Land Trusts and refuges.

The Welfare Reform and Work Act 2016 includes provision that allows a social landlord to be exempted from the requirement to reduce rents if complying would result in serious financial difficultly or jeopardise their financial viability.  The test however is extremely strict and requires the social landlord to first: "have considered all possible options to ensure continued financial viability" before making an application.

This provision, according to the Government, provides a safety net for those providers who do not have the capacity to offset the decrease through efficiencies or from elsewhere in their business.  In practice gaining an exemption is not always an option.

Short-term accommodation

The Government recognises that the new funding regime may not work for very short term accommodation, including hostels and refuges.  Funding for this type of accommodation will benefit from the same protection as supported housing in general.


As the changes do not bite until 2019, there is every possibility that these changes may not be enacted given the extra resources that these could place on the NHS at a time when Department of Health's official policy is to promote community healthcare.

Social landlords cannot remain complacent and must plan their budgets on the assumption that these will happen.

Blake Morgan will keep you fully updated of any further changes.

About the Author

Holly is a member of the Property Litigation team. She has experience of a wide range of property litigation, land disputes and housing issues.

Holly Stedman
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029 2068 6153

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