In our previous blog series we considered how freedom, dignity, equal opportunity and relational poverty are all key issues in addressing homelessness. We now turn our attention to the issue of the lack of truly affordable housing particularly when it comes to the provision of supported accommodation.
The government definition of affordable housing is housing where the rents are set at 80% of market value. This often works out at more than the cost of living in social housing. It is questionable in many areas whether 80% of market rates is actually affordable for those among us on low incomes.
There has been substantial debate over the last few years as to how to work out what a truly affordable rate of rent looks like. This is something that we have recently been wrestling with as an organisation and provider of supported accommodation as to how we pitch our rent levels. The whole exercise is a balancing exercise. It is essential that we adopt fundamentally a tenant-centred approach to homelessness if they are to benefit from the services provided. At the same time we also have to ensure financial sustainability of providing the service without which there is no benefit to the tenant in the first place.
This article from Shelter UK suggests that truly affordable rents should be 35% of Net Income.
The whole point of affordable rents is to benefit those who are on low incomes. If we take the National Living Wage (NLW) as our starting point, it is currently set at £7.83 per hour. Based on an average working week of 40 hours, for an individual on NLW the take home pay is roughly £278 per week after deductions. 35% of that works out at just over £97 per week. For arguments sake this could be rounded to £100.
Based on Shelter’s assertion that a properly affordable rent should be 35% of take home pay, we are left with a maximum rental level of £100 per week for an individual who is earning the National Living Wage. It could be said that this provides a benchmark within the sector for the purpose of evaluating the affordability of the rents set by providers.
Compare this affordable rent benchmark to the levels of rent charged in Support Accommodation particularly in hostels and a picture emerges as to why the system is currently creating a culture of worklessness. A DWP report from 2010 found that the average Housing Benefit claim for an individual living in a hostel was £155 per week with many hostels claiming over £200. This was 8 years ago and with the cuts to other sources of funding, the average has increased substantially in the meantime. In our local area providers that we know of charge between £175 and £250 per week to Wolverhampton Council in housing benefit.
These figures show that the rents charged in supported accommodation and hostels in particular are often more than twice what Shelter deems to be a properly affordable rent. This is for the rent itself let alone the service charges. These can be as much as £36 per week on top of the rent and are taken out of the residents’ already meagre benefits.
The level of the rent makes little difference to the resident as long as they are not the ones required to pay it themselves but what happens when they find work? In short they cannot afford the rent. This leaves them with the following options:
To go from being in supported accommodation to independent living and holding down a job in one step is too much responsibility to ask any individual to take on. It is almost impossible for those who have additional needs. We are all at our most vulnerable during significant times of transition which include moving home and starting a new job. These are times when additional support may prove invaluable but coincide with support being withdrawn. Is it surprising that many individuals fail to hold down the job and to maintain their tenancy and end up back below the housing line and back in the system?
The financial structuring of the hostel model is creating and sustaining cycles of housing poverty that the providers of supported accommodation are purporting to tackle. The system itself is holding people back and trapping them. It is no wonder that there is a revolving door at the end of the line through which the vast majority of former homeless individuals come back to start again at the beginning. This is the kind of cycle of poverty that needs to be broken if we are to #makehomelessnesshistory.
To do this effectively requires thinking outside of the box and providing alternative financial models for move-on accommodation that support individuals to transition from traditional supported accommodation into independent living.