Council leaders have called for supported housing to be exempt from the housing benefit cap to prevent the most vulnerable people from losing their homes.
The Government will decide in July whether the housing cap will apply to supported accommodation. However, the Local Government Association (LGA) warned those living in this type of housing would be unlikely to have enough money to cover the higher rental costs.
This could see councils having to find other suitable accommodation for tenants, and some people may even be forced to remain in hospital due to a lack of homes.
The LGA also said the cap could force many supported housing schemes to close if it was applied to them.
Community wellbeing spokeswoman for the LGA, cllr Izzi Seccombe, said: ‘Councils have real concerns over the risk to vulnerable residents if the Government goes ahead with its original proposals to apply the Local Housing Allowance cap to supported accommodation.
‘We fear that due to the current uncertainty in the market, many supported housing schemes are not being built, and existing places may be forced to close, leaving new tenants with nowhere to live. This will heap huge pressures onto councils who are already struggling to cope with and fund demand for housing and social care.
‘We urge the Government to listen to our call and exempt supported housing from the cap, and to work with us to look at alternative ways of managing this cost.’
Figures from the National Housing Federation show more than 9,000 planned supported housing units may not go ahead, and 41% of all existing schemes are at risk of closure.