The Scottish Federation of Housing Associations (SFHA) is calling on the UK government to urgently rethink upcoming changes to Housing Benefit which could cost the social housing sector hundreds of millions of pounds a year and put the health and wellbeing of vulnerable tenants at risk.

The SFHA said that the changes, which will see the amount of rent covered by Housing Benefit in the social rented sector capped at the relevant private sector Local Housing Allowance (LHA) level, could threaten services, investment and jobs and have a devastating effect on vulnerable people, including older people and disabled people.

A preliminary study by the SFHA found that the loss to the housing associations sampled could range from £5.2 million to £14.3m a year and this could potentially increase to hundreds of millions of pounds a year across the entire Scottish sector.

While social rents are typically lower than LHA rates across Scotland, two groups are likely to be adversely affected by the changes announced in the Chancellor’s Autumn Statement. Currently, single people under the age of 35 years who are living in private tenancies are awarded the ‘shared accommodation rate’ regardless of the number of bedrooms they have or whether they are actually sharing. The proposed cap on Housing Benefit will limit single social housing tenants who are under 35 to this ‘shared accommodation rate’ regardless of accommodation size and will apply to all new tenancies started after 1 April 2016. The study showed that under the new policy, a single person under 35 who is paying an average social housing one-bedroom property rent could face a weekly shortfall of £6.22 or £323.44 per year.

People living in supported accommodation include homeless people, older people and disabled people. Across the housing associations surveyed by the SFHA, the potential loss (where a loss was identified) to a tenant per week ranged in value from £4.48 to £268.25.

The Federation said that housing associations cannot simply lower their rents to protect single under-35s and those in supported accommodation. The potential loss to social landlords’ incomes could jeopardise vital investment, jobs and services. And in terms of supported accommodation, the additional costs of accommodating or providing housing related services to people with support needs are directly reflected in higher rents and/or service charges. Disabled people may not be able to live independently in their own homes if the essential adaptations and services that they require cannot be funded.

Mary Taylor, chief executive of the SFHA, said: “Ahead of the opposition day debate in the House of Commons on Wednesday, we are calling on the UK government to re-think this policy due to the potential effect that it will have on social landlords and tenants.

“It is estimated that 62 per cent of housing association tenants rely on Housing Benefit to help them pay for their rent. Any change to Housing Benefit can undermine the ability of such tenants to pay their rent, thereby putting their home at risk, and threatening both their physical and mental wellbeing as well as posing a real threat to the financial sustainability of housing associations.

“The alternatives available if a vulnerable person cannot access supported accommodation are bleak. Some individuals with complex needs may end up sleeping rough or end up in prison. Some tenants, particularly older and disabled people, may end up in hospital. Hospital care is more expensive than supported accommodation: the cost of a general hospital stay is £530 per night – nearly £194,000 per year. In contrast, for example, an association providing supported care for tenants with very complex needs, at the high end of the cost spectrum, costs £18,435 per year.

“Not only has this change been made without consultation but it also interferes with devolved housing policy. It will save the government very little but will cost those affected a lot.”

Mary Taylor added: “While we welcome the announcement by the UK government that it will undertake a proper economic analysis to gain an accurate figure of the impact of the LHA cap, we urgently need it to take further steps. We are calling on the government to suspend the implementation of the policy, at least until its own analysis is completed and published. The government must rethink the policy should it become obvious that it will have a catastrophic impact on some of the most vulnerable people in our society and on the social landlords that support them.

“For the future of the social housing sector and its tenants, it is vital that the UK government, working in partnership with housing associations in Scotland and across the UK, takes measures to ensure that the financial security and stability of these vulnerable groups and the social landlords that support them are safeguarded.”

The SFHA’s report has been endorsed by the Housing Support Enabling Unit, Poverty Alliance and Inclusion Scotland.