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Conclusions and Implications Paper 3 : Evidence Review of the Impacts of UK
Welfare Reform on Housing in Scotland
Communiti es
Analytical
Services is undertakin g a programme of research to monitor the impact of welfare reforms on housing in
Scotland .
This is one of seven policy and practice focussed summaries of the
Evidence
Review of the Impacts of UK
Welfare
Reform affecting
The conclusions and implications identified in this paper are suggested by an analysis of available evidence, they do not necessarily represent the policy of the
Scottish Government or the views of the Scottish Ministers
Scottish Government
Communities Analytical Service Division

housing in
Scotland
(2014 Gibb et al). For full details of the findings read the full report i .
For details of the reforms to welfare click here.
For further information please contact Hannah Harrison: hannah.harrison@scotland.gsi.gov.uk
/ 0131
244 6904.
Conclusions and Implications
Evidence suggests that the welfare reform changes are leading some landlords in the Private Rented Sector (PRS) to stop renting properties to those in receipt of benefits or withdraw from the sector altogether. It appears as if more landlords might follow a similar course of action going forward. This would heighten competition in the market, both for those in receipt of benefits and other renters as the potential pool of properties contracts.
Tenant arrears are reducing the revenue streams of landlords; both in the private and social sectors. This has potential implications for on-going maintenance of properties and investment. Consequentially this could lead to a decline in housing quality, with benefit recipients confined to poorly maintained and unfit housing. The evidence has drawn attention to the link between poor housing and negative health and well-being outcomes.
The evidence shows that in the face of welfare reform, social landlords are witnessing increased demand for support services, particularly around money advice and budgeting. A considerable resource has been invested into providing such services and supporting tenants to adjust to the changes including the up-skilling of staff.
Landlords have expressed concern over meeting the demand for such services and the pressures this demand is placing on staff. In addition there is some evidence that advisors themselves have difficulty understanding the issues. Currently the services provided by landlords appear to vary across the country.
The future of welfare provision in Scotland is at the time of writing uncertain with many possible outcomes, as such the implications of these findings should be reviewed as welfare plans develop.
Specific Key Findings
Lack of housing options in the Private Rented Sector (PRS) for those on Local
Housing Allowance (LHA)
Scottish Government
Communities Analytical Service Division

 Early indicators are that some landlords have already moved away from
Housing Benefit (HB) level markets, and others will in the future move away from HB level markets (Gibb et al 2014: 17).

Vickery (2012) highlights the fact that in general women are impacted most by reduced housing options as “low pay and welfare reform impact disproportionately” on them (see also Department for Work and Pensions
2013a).

The context of reducing resources and rising rents is also one of the main causes of concern for private landlords in providing services to low-income households (Gibb et al 2014: 21).

There is the recognition that the market may not respond to HB reforms and that many households are likely to be forced to move to areas where demand is high and landlords can choose tenants with a different income source (e.g. see
Department for Work and Pensions impact assessments 2011-14).

Grey literature confirms increasing reluctance to engage with the claimant market. The National Landlord Association (30th July 2013) reports only 27% of landlords letting to LHA claimant tenants with the same press release saying
51% of all landlords and 60% of small landlords choosing not to let to this client group.

Kent landlord F ergus Wilson told the Guardian (7th Jan 2014) “All the landlords will tell you that there is so much default now with HB tenants that you are just simply better off with somebody working”; he is terminating the tenancies of
200 tenants on HB as a pre-emptive move for business reasons and as a response to both the cap and direct payments.

Landlords are reporting growing arrears (Beatty et al 2012) causing them to withdraw from renting to HB tenants.

Arneil Johnston ’s (2013 p 74) study of a rural area in Scotland found 25% of landlords said they may leave the sector in the next 5 years. Although welfare reform was not cited here as a reason for this (retiring/hassle and costs cited by
36%, p51), if there is a negative impact of welfare reform, and more specifically
Universal Credit, on costs or administration for landlords it could influence their decision to stay or leave the sector. Loss of rental stock in largely tight markets would be a negative outcome for renters (Gibb et al 2014: 26).

Overall ear ly monitoring and surveys indicate a likelihood that tenants’ housing responses to the reforms will broadly be to look for social housing or cheaper
PRS housing. In both instances this will increase pressure on existing limited stock. In the PRS this is likely to have an inflationary effect on rents (Gibb et al
2014: 42).
Housing supply and quality

A February 2013 survey by Chartered Institute of Housing/Circle Housing
Scottish Government
Communities Analytical Service Division

asked how 75 English landlords of all sizes were preparing for the underoccupancy charge. They found that most landlords were amending their allocations systems to encourage and incentivise downsizing to smaller properties, offering exchanges within the stock and mutual exchanges with other partner landlords - but they recognised that most landlords would only be able to rehouse a small proportion of those affected because of a lack of suitable stock.

The Scottish Housing Regulator (2014) undertook an online survey of all
Registered Social Landlords (mainly housing associations) and local authority landlords between November and December 2013. Individual landlords identified the need to reconsider their allocations systems with respect to under occupation, delivering Discretionary Housing Payments (DHP) and improving methods of working.

Reduced investment in housing quality arising from a range of welfare reforms may stimulate the regrowth of ‘bedsit-land’ as landlords have reported in earlier studies (Nevin-Leather Associates (2011).

If the government succeeds in driving down PRS rent levels through caps on
LHA then the issue of the condition of the properties on which rent levels are set becomes increasingly important (Gibb et al 2014: 43).

The Department for Work and Pensions has acknowledged (2010) that as a consequence of reforms landlords “may do less to maintain properties.”

Setting LHA rates according to either 30 th percentile of rents in the Broad
Rental Market Area or the existing LHA rate plus 1%, whatever is the lower of the two, will force LHA claimants into lower quality housing. Consequently poorly repaired and unfit housing will increasingly set the standard government expects welfare recipients to live in (Gibb et al 2014: 43).

The Pro-Housing Alliance (2012) report welfare reform having a “…detrimental effect on the health and wellbeing of private tenants” who, because of lack of alternatives and fear of landlord reprisals, “... choose to remain living in cold and unsafe housing” (Ibid, p5). Low income and benefit supported households are in creasingly occupying a PRS “in which over 1.3 million homes are not decent” and 900,000 have a category 1 hazard under the Housing Health and
Safety Rating System (Ibid p6).

Poor housing conditions increase health risks for tenants (see below). Further
Arneil
Johnston’s study (2013 p13) shows that in Argyll and Bute, 36% of homeless applicants left a PRS tenancy for physical or mental health reasons
Support services

Social landlords have expended considerable resource in preparing and seeking to mitigate problems, actively manage arrears and support tenants as they adjust to the new regime (Gibb et al 2014: 28).
Scottish Government
Communities Analytical Service Division


Universal Credit has not yet been fully introduced and its precise timing and indeed details relating to its housing component remain uncertain. But the general point is that while it is difficult to assess the extent of the problem of shifting across to tenant responsibility, it is evident that landlords are very concerned about questions of financial inclusion, budgeting skills and financial management (Gibb, 2013).

Mitigating action includes identifying and supporting tenants at risk of losing benefits via budgeting and financial inclusion advice and training (Gibb et al
2014: 37).

In the short term, efforts are focused on helping current tenants avoid arrears and manage their finances in the new environment (Gibb et al 2014: 37).

Several agencies (GHN 2013; Pro-Housing Alliance; 2012; staff at RSLs, CAB
2014) reported increased demand and advice staff feeling overwhelmed by the range, depth, and complexity of reforms and their profound impact on clients.

There is an advice deficit in terms of the capacity of agencies to meet demand for advice on their reduced circumstances but also in terms of advice staff themselves understanding the reforms and potential mitigation (Gibb et al
2014: 41).

The Scottish Housing Regulator (2014) survey asked what were the greatest challenges landlords face in relation to welfare reform. One of the main current challenges reported was providing adequate support to affected tenants.

Small surveys conducted by Glasgow Homeless Network indicated that many front line staff felt ill equipped to deal with the advice role regarding welfare reform. This will impact on households in all tenures but perhaps more so in the
PRS where landlords may be less sympathetic to tenants’ financial difficulties
(Gibb et al 2014: 45).

The Centre for Public Scrutiny (CfPS) noted in 2013 that several councils have detailed action plans that seek to provide practical support and assistance but
CfPS are sceptical that such plans are in place consistently across the country.
Scottish Government
Communities Analytical Service Division

Arneil Johnston (2013) Argyll and Bute Council: Research into the Private Rented
Sector. Argyll and Bute Council.
CAB Scotland (2014) Independent Review of Sanctions: Response from Citizens
Advice Scotland.
Centre for Public Scrutiny (2013) The local impacts of the introduction of Universal
Credit and the wider welfare reforms, prepared for DWP, August.
Chartered Institute of Housing/Circle Housing (2013) Welfare Reform
– how are landlords preparing? A Summary of findings from a CIH/Circle Housing Survey. CIH:
Coventry.
DWP (2013a) Universal Credit pathfinder evaluation: interim results from the
Universal Credit claimant survey, wave 1.
Gibb, K (2013 ) The ‘Bedroom Tax’ in Scotland. Welfare Reform Committee Scottish
Parliament: Edinburgh.
Gibb, K., Sprigings, N., Wright, S., and McNulty, D. (2014) Evidence Review of the
Impacts of UK Welfare Reform Affecting Housing in Scotland. Scottish Government:
Edinburgh.
Nevin-Leather Associates (2011) The Private Rented Sector in CWEC. Cheshire
West and Chester Council.
National Landlord Association (2013) More than a third of landlords struggle to pay their bills when tenants miss payments. Press release from member survey
8/11/2013.
Pro-Housing Alliance (2012) Poor homes, poor health
– to heat or to eat. Pro-
Housing Alliance/Affinity Sutton/JRF.
Scottish Housing Regulator (2014) Early impacts of Welfare Reform on Rent Arrears
Research Report 2 February 2014 Scottish Housing Regulator: Glasgow.
Vickery, L. (2012) Deepening disadvantages in housing markets for women. Local
Economy Vol: 27 Issue: 8 Pages: 796-803
Williams, P, Clark, A and Whitehead, C (2013) Intended and Unintended
Consequences? CCHPR: Cambridge.
Scottish Government
Communities Analytical Service Division

i The study was limited by (i) the timing and phased nature of the introduction of the reforms (ii) the patchy nature of post reforms analysis and (iii) the aggregated nature of the data used to predict impact before the reforms (iv) mitigation activity in Scotland.
Scottish Government
Communities Analytical Service Division