The LHA cap was designed to stop the state from subsidising private landlords through a benefit which is designed to help vulnerable individuals in need of housing. For example, for the year 1 April 2017 – 31 March 2018, the maximum amount of housing benefit that can be claimed for a 1 bed house in Sunderland is capped at £88.00 whilst in Central London it is capped at £260.64[1].

However, it was announced in the Autumn Statement 2015 that from 1 April 2018 the rent payable to social housing providers (both general and supported housing providers) would also be capped at LHA rates.

Supported housing covers a range of different housing types where residents generally require a level of personal care, support or supervision. Residents of supported housing typically include the elderly, people with mental, physical and learning disabilities, and substance abusers. The costs of providing supported housing are often higher due to:

  • higher land value, such properties are often best located in a more desirable location and closer to amenities to enable people to live as independently as possible;
  • development costs, supported housing is often newly built and specially designed for residents with greater support needs than general housing tenants;
  • adaptations, many buildings are specially adapted to take account of potential impact on neighbouring owners and access;
  • maintenance, buildings and furnishings often require more frequent repairs and maintenance due to higher wear and tear; and
  • staffing costs, which are significantly greater where residents require 24/7 support or on-site services.

At the end of 2015, there were approximately 651,000 accommodation based supported housing units in Great Britain, delivering an average net saving to the public purse of around £940 per resident per year and up to £6,764 per year for residents with learning disabilities[2].

Increasing need for supported living accommodation

Demand for supported housing has increased and there are approximately 761,000[3] people living in supported housing in Great Britain. Their needs, wishes and experiences vary hugely, from older people with long-term, low level support needs, to individuals fleeing domestic violence or young adults with severe learning difficulties. As a result, rent levels in supported housing (as well as costs) tend to be higher than those charged for similar accommodation in the private sector[4].

The availability of specialist and supported housing is failing to keep up with existing and the increasing future demand. It is estimated that 16,000 specialist homes are needed every year for older people to close the gap in capacity by 2030. This failure does not include individuals with learning disabilities or mental health problems[5]. As a direct result of the Government’s LHA announcement in 2015, a significant number of supported living developments were put on hold and David Orr, CEO of the National Housing Federation was rightly concerned that the proposal “would lead to supported housing service closures on a ‘massive and unprecedented scale’.”[6]

It is no secret that the social care sector is under extreme financial pressure, serving a population that is living much longer and with more complex needs. As part of its response to these increasing demands, the Government plans to unlock some of the £4.12 billion housing benefit cost[7] (that is currently spent on meeting housing costs only) and to redistribute some of those funds to meet the cost of support and care services. As the news comes that 60p in every £1 spent by Local Government is used on care for children and adults[8], the challenge is to create a funding strategy that is financially sustainable, can flex as needs change and is yet simple to understand and administer.

As the Government seeks to reduce demand on its public services and tighten the strings of the ‘public purse’, it has recognised the need to look at alternative funding models which will “protect and encourage the supply of a wide range of supported housing”[9].

In November 2017 Theresa May confirmed that the LHA will not apply to social housing which includes supported housing. The Government has launched two consultations, in relation to housing costs for sheltered and extra care accommodation, and housing costs for short-term supported accommodation.

Consultations and future funding

The latest proposal divides supported housing into three categories: 

  • Short-term and transitional support
  • Long-term support
  • Sheltered housing and extra care supported housing

Type of care

  • Accommodation and support following a point of crisis or as part of a transition to living independently (e.g. hostels or safe houses).
  • Independent living in the community, supporting complex or lifelong needs.
  • Meeting low level elderly needs and providing an alternative to hospital stays or residential care.

Proposed funding

  • ‘Local grant fund’ – 100% commissioned at a local level by the Local Authority. Financed through a ring-fenced grant. All housing costs (including rent and eligible service charges) will now be paid from DCLG to Local Authorities (with conditions attached) rather than through housing benefit.
  • ‘Universal Credit’ – 100% of housing costs (including eligible service charges) paid through Universal Credit with no LHA applied.
  • ‘Sheltered rent’ – a gross eligible rent, capped (including service charges) and paid through Universal Credit. The cap to be set by the housing regulator. Subject to the annual limit on rent increases.

The new funding regimes will be effective from April 2020.

Some of the changes are positive in that removing the LHA is cap should mean that long-term funding is more secure and developments that were previously put on hold can now be revisited. In addition, the many problems associated with Universal Credit where delays of 5-6 weeks “for a new claim to be assessed and [the] first payment to arrive” are standard[10] will no longer apply to those in need of short-term support.

However, the categories fail to take account of the differences between residents of extra care and sheltered housing. Extra care is distinguished by the availability of care and support services (often available 24 hours a day) with many communal areas and facilities; whereas sheltered housing is often chosen by tenants who continue to live independently but have opted to ‘down-size’, with little or no care and support needs.

The ring-fenced grant, payable to Local Authorities is a return to the old Supporting People Programme. The same concerns apply in that with significant funding cuts to Local Authorities, there are unlikely to be the staff available to properly review, commission and monitor these services. It is also likely to create significant inconsistencies between Local Authorities, a form of post-code lottery determining what support is available to the most vulnerable people in our society. Local Authorities’ are already subject to numerous statutory and public law obligations to partner with local bodies, consult with stakeholders, assess and shape the local market[11]. It is not clear how the proposals will actually ensure that commissioners “plan for both accommodation and associated support” in a way that truly understands the need to provide good housing alongside care and support services, particularly without additional funding to support the infrastructure that will need to sit behind this type of consultative commissioning.

The consultation is open until 23 January 2017. You can read the proposals in full and find details on how to subject your response here.

Further information

For advice or assistance on the issues raised in this article please contact  Emma Watt Jonathan Cox or Zishaan Saleem.


[2] ‘Paying for supported housing’ Commons Library Briefing, 20 October 2017 

[4] ‘Paying for supported housing’ Commons Library Briefing, 20 October 2017 

[5] Housing for older people inquiry – Communities and Local Government Committee, March 2017 

[6] Inside Housing, Placeshapers calls for supported housing exemption, 24 December 2015

[7] Supported Accommodation Review, DCLG and DWP, November 2016, page 3




[11] Section 5 and 48-56 of the Care Act 2014.