I refer the member to the report published on 13 May 2018 for the Scottish Government’s assessment of the impact of welfare reform on tenants in both the private and social rented sector. This is the third follow up paper to the Annual Report on Welfare Reform, and covers the impact of welfare cuts on the Housing Sector.
The Scottish Government believes that UK Government Welfare policies are limiting access to affordable, appropriate private sector accommodation for those on low incomes, and as such increases the risk of hardship and homelessness. We know from the National Audit Report, published in September, that the UK Government did not effectively assess the impact of welfare reforms on homelessness.
Across the ninety Broad Rental Market Areas (BRMA), Local Housing Allowance (LHA) rates are only able to meet the costs of rents, at the bottom 30% of the market, in ten areas. In half of the LHA rates less than 20% of the local market is affordable without topping up from other resources and in 26 out of the 90 rates the shortfall in cash terms between the LHA ate and the actual thirtieth percentile of rents exceeded £10 per week.
In the Social Rented Sector the single most substantial cut, the Bedroom Tax has been mitigated in full by the Scottish Government through DHPs, at a cost budgeted at £50m. However landlords and local authorities report that the roll out of Universal Credit is leading to an increase in rent arrears.
As well as the changes to direct support for housing costs tenants in both the private and social rented sectors will be affected by changes and cuts made across the welfare system increasing the financial pressures on households, and the ability to meet rent.
We will continue to work with local authorities and landlords to better understand the situation.