Around 12,000 social housing tenants who are under 35 in Scotland face a collective rent shortfall of up to £8.6 million, according to a report.
Department for Work and Pensions proposals could see local housing allowance (LHA) payments or the housing element of Universal Credit limited to that of the shared accommodation rate after April 2019.
The Chartered Institute of Housing’s (CIH) research found around 12,000 under-35s living in Scotland would collectively be hit by a rent affordability gap of between £5.3 million and £8.6 million, if the changes are implemented.
CIH Scotland policy and practice manager Ashley Campbell said: “The results of this research confirm the damaging impact the UK Government’s plans to cap housing benefit at LHA rates will have on younger social tenants in Scotland.
“That impact goes far beyond the immediate financial effect. Many of those 12,000 affected face the prospect of falling into rent arrears and, in the worst cases, losing their home and being made homeless.
“In many cases, local authorities will face real challenges with rehousing those now unable to afford their rent because we simply do not have enough appropriate housing available to do so.”
The figures are an estimated gap between current housing benefit and future LHA rates for single people aged under 35 in social housing.
Since October 2015, the UK Government has made various proposals and amendments to cap housing benefit or the housing element of Universal Credit for social housing tenants at LHA rates, including for those living in supported or temporary accommodation.
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Legislation has yet to be introduced however as the proposals currently stand, single people under 35 without dependant children would have their allowance capped at the shared accommodation rate.
The proposals are intended to bring payments in line with those who rent privately.
LHA benefits are already capped at the shared accommodation rate for under 35s who rent privately.
The shared accommodation rate is calculated at the same rate as for a single room in shared accommodation.
Meanwhile, LHA is currently determined by factors including the number of rooms in a property, level of income and the area in which a person lives.
Edinburgh and Glasgow are likely to be the most severely affected by the policy with 27% of all of Scotland’s single Housing Benefit claimants aged under 35 living in the two cities, equivalent to more than 6,500 people.
The total weekly shortfall in Edinburgh is expected to be £19,600 while in Glasgow they face a collective weekly shortfall of £18,800.
CIH’s report, commissioned in partnership with the Scottish Government and carried out by Indigo House Group, shows the potential financial impact varies considerably depending on the size of home people are living in and how social rents compare with LHA rates for the area.
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Across Scotland, single social housing tenants under 35 affected by the cap in a one bedroom home will face an average shortfall in rent of £6.60 per week.
The highest shortfall for one bedroom homes would be in Edinburgh, at £22.09 per week.
A DWP spokesman said: “The best way to help people pay their rent is to help them into work, and employment is now at a record high.
“Our welfare reforms are incentivising work and restoring fairness to the system, and we continue to spend £24bn a year helping people across the UK with their housing costs.
“We will set out the next steps later in the autumn on our new funding model to secure the future of supported accommodation and ensure help goes to those that need it the most.”