85% less supported housing built due to uncertainty with government’s LHA plans

Housing associations including Riverside have had to stall plans to build new homes to help the most vulnerable, new research has revealed.

The number of supported, sheltered and extra care housing schemes being built has decreased from 8,800 to 1,350 units, according to a new survey by the National Housing Federation.

This follows months of concern over Government plans to review funding for these services, which the sector and leading parliamentarians believe will not work. A Green Paper, expected to detail the proposals, was due before the summer but has now been delayed until the end of autumn.

The 69 housing associations who responded to the survey deliver a third of supported and sheltered homes in England and include Riverside. Supported housing provides a secure, safe place for the most vulnerable, a majority of whom are older people or people with long-term disabilities, saving the taxpayer around £3.5bn in NHS costs.

John Glenton, Riverside’s Director for Care and Support, who gave evidence at Westminster on the issue, said: “It is well known that the UK has an ageing population and there is a need to increase housing for older people that can provide care and support with choice, control and as much independence as possible. 

“Our extra care and Retirement Living schemes absolutely match what is needed for the future and we want to build more of this type of project. The situation for our supported housing services is the same, we are the third largest provider of homeless services in the country and with homelessness doubling over the past five years we want to increase our capacity and do more. 

“Due to the uncertainty around future funding like many other providers we are unable to commit to building new projects and so there is an absolute need for clarity around future funding.”


Amid the uncertainty, housing associations have doubts about their future income – if the proposed funding model and the withdrawal of funding for support services is introduced. As a result, the National Housing Federation research found:

  • 71 new schemes, representing 2,185 homes, have been postponed
  • 19 new developments, totalling 803 homes, have been cancelled
  • 22 existing supported schemes and 3 sheltered schemes, amounting to 132 homes, are facing closure.

Housing associations made a strong case for an alternative model, outlining how money will be allocated and how long it will be available for. It was endorsed by a joint select committee of MPs, who recognised that the basis for the new system was not “a competent starting point” given it is based on the specific circumstances of the private rented market

David Orr, Chief Executive at the National Housing Federation, added: “These findings really bring it home: changes to supported housing funding are stopping building for the most vulnerable. Housing associations know first-hand that the proposed funding model will not work – a view backed by a joint select committee – and yet Government has failed to heed warnings.

“With social care in crisis, the role supported housing plays in alleviating pressures on the NHS is ever more important. These changes have not even come in yet and they have taken 7,000 homes for vulnerable people out of the pipeline.

“The proposed changes in funding bear no relation to the real cost of providing this type of housing. It is time Government put supported housing on a secure and sustainable footing.”

Case studies

Riverside’s Homeless Veterans Scheme – Colchester

This scheme, comprising 50 supported housing units for homeless veterans, is currently on hold due to the uncertainty over revenue funding.

The annual shortfall for people living in a one bed flat with high levels of support would be around £116 a week and almost £76 for those living in a flat offering a move-on facility.

The table below shows the current projected impact of the Local Housing Allowance cap (the lowest levels of rent in the private rented sector) for each tenant:

 Scheme details

LHA weekly cap

Proposed Target Rent + service charge

Shortfall of approx. per week

1 bed flat (with high levels of support)




1 bed flat (with move-on facility)




Despite council support for the service, the local authority is not currently in a position to commit to funding the gap. The annual shortfall in the first year of operation would be £260,000 representing 49% of total rental and service charge income.

Riverside has secured a £4.5m capital allocation from the Veterans Accommodation Fund administered by the Ministry of Defence. The service has also received internal approval for significant additional subsidy from Riverside.

 Riverside’s Keswick Close Extra Care – Middleton, Rochdale

Keswick Close is also on hold, as the majority of tenants are likely to be benefit-dependent in this low-income area.

Local residential care costs range between £400 and £1000 per week. The imposition of caps means that tenants will face a shortfall in housing benefit representing over 25% of rent and service charges in the case of a 1 bed flat and 18% in the case of a two bed as illustrated below:

 Scheme details

LHA weekly cap

Proposed Target Rent Riverside + service charge

Shortfall of approx. per week

1 bed flat




2 bed flat




Without additional funding, tenants will struggle to make up this shortfall from their own incomes, and so the scheme would simply not be viable.

Keswick Close is a planned extra care scheme, which will comprise 101 homes, a mix of one and two bedroom apartments and bungalows. The scheme is supported by +£3m public investment through the HCA.