Blog: Assessing the impact of LHA caps for young people living in Scotland

Ashley Campbell
Ashley Campbell

By Ashley Campbell, policy and practice manager at CIH Scotland

The UK government’s Autumn Statement and Spending Review presented on 25 October 2015 included a proposal to cap Housing Benefit (or the housing element of Universal Credit) for all social housing tenants at Local Housing Allowance (LHA) rates. This will bring payments for social housing tenants in line with private rented sector tenants.

The cap will apply to all social housing including supported accommodation which provides essential services for vulnerable people such as those fleeing domestic violence, homeless people, older people and those who need extra support to live independently.

Outcry from the housing sector and other key stakeholders across the UK prompted some rethinking of the policy with implementation now being delayed until 2019. The UK government is also consulting on the provision of additional funds to be made available for supported housing to cover costs over and above LHA rates. While it is not clear how much funding will be made available or how far this will go towards plugging the gap, there has at least been some acknowledgement from the UK government that supported housing is important and that it merits additional funding.

But what about mainstream social housing?

While the majority of social housing tenants will not be immediately affected, as social rents tend to be lower than LHA rates, the policy does fundamentally change the way that housing costs are covered by breaking the link between actual costs and entitlement. If the cost of providing social housing increases in the future but LHA rates remain frozen or are further reduced, social housing providers and tenants who rely on help with their housing costs are going to face a shortfall in rent.

But that is just a worst case scenario it is not certain. What is certain is that young single people living in social rented housing will potentially be faced with significant shortfalls in 2019 because capping social rents at LHA rates will introduce the Shared Accommodation Rate (SAR) to the social rented sector.

Introducing SAR to the social rented sector means that single people under the age of 35 who need help with housing costs will no longer be entitled to live in a self contained home. Their benefit entitlement will only cover the cost of renting a room in shared accommodation.

Flat sharing is not inherently bad. Most of us have probably done it at some point, albeit with mixed success. Sharing can either result in making a friend for life or having to move out and start again because of irreconcilable differences in musical taste, standards of cleanliness, sporting allegiances… In case of the latter, most people will be able to start again because they have enough savings, they have strong social networks or they can ask mum or dad for help.

Many young people living in the social rented sector will already have limited housing options. They are unlikely to be able to afford a place in the private sector. They may lack the skills required to share a tenancy and struggle to make ends meet under these new rules.

While a few social landlords are providing support to help some young people into shared accommodation by offering pre-tenancy training or matching services, the sector is not geared up to provide access to shared accommodation at scale.

It is not yet clear how many young people will be affected by the policy or what the financial shortfall might be. What we do know is that it will increase the risk of homelessness for young people and if there are no suitable, affordable housing options for young people, it could lead to lengthy stays in temporary accommodation.

CIH Scotland, in partnership with the Scottish Government, has commissioned Indigo House Group to carry out a piece of research to address some of the gaps in our knowledge. The project will assess the likely extent of the impact, estimating how many young people in Scotland will be affected and what the financial implications will be. It will also explore options for mitigation work that can be undertaken by the housing sector or supported by the Scottish Government.

The research is expected to be complete by summer 2017. If you have any questions about the project or you would like some more information, please get in touch with Ashley Campbell, policy and practice manager at CIH Scotland (

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