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affordability policy

Affordability Policy

Date of Issue: January 2020

Issue Number: 2

Date of next review: January 2023

This Policy aims to ensure sustainability by evidencing that an applicant’s income is enough to cover their housing costs, and that the decisions made can be duly demonstrated in accordance with clause 6.3.3 outlined in the Property Pool Plus Sub Regional Choice Based Lettings Scheme Policy.

These clauses provide Halton Housing (HH) with the ability to make informed decisions using its own independent assessment criteria when assessing suitability of a property allocation.

  • The aim of this Policy is to allow HH to demonstrate and evidence property allocation decisions using appropriate affordability assessment tools.
  • The Teams who will implement the use of this Policy are Housing Options and the Money Advice and Welfare Benefits Team.

Policy Statement

The aim of this policy is to focus on the customer and what they can afford to pay for their housing to ensure it is sustainable. There is concern that some applicants do not have the financial resources to afford to rent and sustain their tenancies within our homes. Consequently, customers who cannot afford to pay their rent may, in a short period of time:

  • Relinquish their tenancy by voluntarily giving us notice of relinquishment
  • Abandon the property without prior notice period
  • Have their tenancy terminated following legal action being taken against them

The affordability criteria is designed to help prevent HH from enabling a new customer to sign for a tenancy where following a financial assessment, clearly demonstrates they do not have the necessary income to sustain the tenancy. This Policy aims to give clear guidelines for circumstances where we will either defer or refuse to house an applicant because of their current financial situation.

1. Information on applicants’ income/financial circumstances

As part of the process customers are required to confirm their income and, where applicable, their assets, for example any equity in their home. This information is gathered from the applicant as part of a pre-tenancy interview by a member of the Housing Options Team.

On this basis there is a need to assess if the applicant meets the affordability threshold. HH will gather additional evidence e.g. bank statements or obtain a credit report to confirm the customers’ current financial status and undertake a financial assessment with a Starter Tenancy Officer to ascertain affordability and assess if their income can be maximised. The approach taken will depend on the applicant’s individual circumstances as follows: Page 4 of 6

1.1 Customer has no income

In some circumstances it is conceivable that a potential applicant has no income which may exclude the option of housing. Examples include:

  • Not working and not entitled to receive any forms of welfare benefits.
  • Non-EU citizen with no recourse to public funds.
  • On benefit but, this is reduced because it is sanctioned for an extended period.

In these circumstances the application will be bypassed during shortlisting until they can provide evidence they have an income sufficient to sustain the tenancy.

1.2 Insufficient income to meet housing costs including rent and utilities

This would include cases where, because of a low income, an applicant is unable to afford the rental commitment on a specific property. This may be as a result of a reduction of benefits, sanctions or any other welfare reforms that are in force at the time of the financial assessment. Consequently, they may have insufficient income to enable them to live in the property without suffering financial hardship.

An assessment is needed to confirm that any income including benefit entitlement is enough to cover the cost of renting a home and paying utilities. It would be deemed to be not affordable if there is a shortfall of over 10% of the income in comparison to expenditure. For the assessment the actual rental for the specific property will be used. If the specific rental amount is not available, then the average NROSH rents for (HH) homes will be used.

In calculating the financial costs of setting up and running a home (including electricity, gas, water etc.), an average monthly cost will be applied (refer to appendix 1).

1.3 Applicant has expenditure which exceeds their income:

Where an applicant has enough income but, because of their level of expenditure, cannot afford the financial commitments of running a home, and there is no likelihood of this changing in the near future, then the applicant will be bypassed on PPP. In addition, credit checks may identify an applicant who has a low credit rating and is likely to struggle to maintain future contractual rental payments.

If any of the above are identified during the affordability checks, the Housing Options Team will make the applicant aware of affordability concerns, initiating the following actions:

  • Referral to HH Welfare Benefit Money Advice Team to review income and expenditure to identify if there are opportunities to increase income and potentially reduce expenditure
  • Offer a referral to internal and/or external support agencies
  • Offer advice and information on improving the applicant’s credit rating
  • Assess if these financial circumstances can be resolved immediately (within 7 days) or medium term (within 6 months) or if longer term (within 12 months).
  • If following a re-assessment there are changes that can be undertaken within 7 days, the applicant needs to provide evidence of the changes before further consideration of an offer of accommodation can be made.
  • If the changes require medium term improvement, these will be set out to the applicant with the action required and the timescale with which to meet the requirements for improvements.
  • If there does not appear to be any likelihood of an improvement in the financial position the customer will be bypassed for accommodation with HH until evidence is provided of an improvement in the financial situation.
  • For any future offers of accommodation on PPP, they will be subject to further financial assessments of the applicant at that time.

All actions will be confirmed in writing to the applicant, including details of how to appeal against our decision in accordance with the Property Pool Plus Choice Based Lettings Policy.

Regulatory and/or Legal Compliance

This Policy links into the following legislation:

  • Welfare Reform Act 2012
  • Rent Act 1977
  • Protection from Eviction Act 1977
  • Landlord and Tenant Act 1987
  • Housing Act 1988 (as amended by the Housing Act 1996)
  • Disability Discrimination Act 1995
  • Equality Act 2010
  • Homelessness Reduction Act 2017

Diversity Considerations

A Stage 1 Equality Impact Assessment has been completed. This confirmed that a Stage 2 EIA is not required.

Links to Strategies, Policies and Associated Documents

This Policy is linked to one of the 6 main priorities within Our Direction 3.0 and focusses on our:

  • Customer Focus

Policies and procedures associated with this include:

  • Affordable Rent Policy
  • • Property Pool Plus Choice Based Lettings Policy
  • • Diversity Policy
  • • Rent Collection Payment & Debt Recovery Policy
  • • Affordability Procedure

Related Help & Support Articles

Find helpful articles on finding your next home with Halton Housing, and how to apply for a home here.

Help & Support Categories

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