This Affordability Policy aims to ensure sustainability by evidencing that applicants income is sufficient to cover their housing costs. That the decisions made can be duly demonstrated in accordance with the clause 2.3.1 and 6.3.3 outlined in the Property Pool Plus Policy.
These clauses provide HH with the ability to make decisions using its own independent assessment criteria for allocations made.
- The aim of this Policy is to allow Halton Housing to demonstrate and evidence allocation decisions using the appropriate tools.
- The Team primarily affected by and who will implement the use of this Policy is the Housing Options Team.
There is concern that some applicants do not have the financial resources to afford to rent our homes. Customers who cannot afford to pay their rent may, in a short period of time:
- Relinquish their tenancy by voluntarily giving notice
- Abandon the property without notice
- Have their tenancy terminated following legal action
The affordability criteria is designed to prevent Halton Housing from setting applicants up to fail. To have clear guidelines for circumstances where we will either defer or refuse to house an applicant because of their current financial situation.
- 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.
On this basis there may need to be a review to assess if the customer meets the affordability threshold. HH can gather additional evidence e.g. bank statements or obtain a credit report to confirm the customers’ current financial status. The approach taken will depend on the customers individual circumstances as follows:
- 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 benefit
- Non-EU citizen with no recourse to public funds
- On benefit and sanctioned for an extended period
In these circumstances the application will be bypassed during shortlisting until the customer can evidence they have an income sufficient to sustain the tenancy.
- Insufficient income to meet housing costs including rent and utilities
This would include where, because of a low income, a customer is unable to afford the rental commitment. This may be as a result of a reduction of benefits; sanctions or any other welfare reforms. As a consequence they may have insufficient income to enable them to live in the property without suffering hardship.
An assessment is needed to confirm that, including any benefit entitlement, the cost of renting a home including utilities would not be affordable (this is defined as 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. Only if not available, then the average NROSH rents for (HH) homes will be used.
In calculating the cost of utilities, including electricity, gas, water etc. an average weekly cost will be applied. It is also good practice to identify if the customer can either purchase household items themselves or already has the necessary items to set up home i.e. furniture etc.
- Applicant has expenditure which exceeds their income:
Where a customer has sufficient income but, because of their level of expenditure, cannot afford the rental cost and there is no likelihood of this changing in the near future, then the applicant will be bypassed. In addition, credit checks may identify a customer who has a low credit rating and is likely to struggle to maintain rental payments.
If any of the above are identified, then using the affordability checks, the Housing Options Team will make the customer aware of affordability concerns, initiating the following actions:
- Review income and expenditure to identify if there are opportunities to increase income and potentially reduce expenditure
- Offer a referral to internal and external support agencies including welfare benefit money advice team
- Offer advice and information on improving the customer’s credit rating
- Decide 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 review, there are changes that can be undertaken within 7 days (e.g. reducing expenditure by ending contracts, access to additional income or capital) 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.
When this is supplied the customer’s application will be reviewed and bypassing will cease. All actions will be confirmed in writing to the applicant.
Management of this Policy is the responsibility of the Housing Options Manager with daily implementation being undertaken by the Housing Options Advisors.
Regulatory and/or Legal Compliance
This Policy links into the following legislation:
- Welfare Reform Act 2011
- 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
A Stage 1 Equality Impact Assessment has been completed. This confirmed that a Stage 2 EIA is not required.
This Policy is linked to one of the 5 main priorities within Our Direction 2.0 and focusses on our:
Protecting our current Income