The g15, which comprises the 15 biggest housing associations in London, has raised fears that an unintended consequence of welfare reform could be that fewer new affordable homes are built.
Up to 1,200 new homes a year nationally – half of them in London, could be at risk as housing associations become more cautious in response to concerns over increased rent arrears and bad debts.
The g15 group of London housing associations, which currently houses around one in ten Londoners in its 410,000 homes, anticipates that rent collection costs could rise by as much as £600,000 a year for each organisation as low income tenants struggle to pay their rent.
Any increase in rent arrears and reduction in income will reduce housing associations’ financial capacity to build the homes that are urgently needed in the capital.
The cost of the increased staff needed to support benefit claimants is estimated at £860,000 and increased legal costs will add a further £300,000 per organisation.
The g15 members anticipate that collectively, some 21,500 of their tenants will lose up to £975 a year in housing benefit when the bedroom tax comes in on 1 April.
And a further one in 50 tenants is expected to be impacted by the overall benefit cap of £500 per week – reducing benefits by up to £2,600 a year.
Part time school cleaner Manuela Winter, from Upper Norwood, South London, is just one g15 resident who will be affected by the changes. She lives in a three bedroom Family Mosaic flat with her 19 year old son, Brandon. The ‘bedroom tax’ means that Manuela has one ‘spare room’ and in April she will have her housing benefit reduced by 14% – leaving her £17.88 a week worse off.
Family Mosaic’s Housing Options team are supporting her to find a smaller home but her options are limited by the need to be near her workplace – Manuela’s low pay means she can’t afford any extra public transport costs. Her son is also receiving help to find a job through Family Mosaic’s Employment Team.
g15 chair Keith Exford, who is Chief Executive of Affinity Sutton said: “Welfare reform represents one of the greatest challenges we and our residents face in the coming years. These changes will put real pressure on hard working families already managing on low incomes, the benefit cap, bedroom tax and changes to council tax benefit could lead to many families losing their homes. They will also impact on the ability of housing associations to deliver new housing in the future.
“g15 members will invest £8.5m in London over next two years to mitigate the impacts upon our tenants of welfare reform.
“Housing associations need certainty and long term income streams in order to borrow the private debt required to deliver the affordable new homes desperately needed in the capital”.