Benefit freeze puts private renting out of reach for low-income tenants and risks fuelling homelessness
Even the lowest private rents are now out of reach for people on low incomes – putting thousands at increased risk of homelessness.
Research from the Chartered Institute of Housing (CIH) showed that more than 90 per cent of Local Housing Allowance (LHA – housing benefit for private renters) rates across Great Britain now fail to cover the cheapest rents, as they were originally designed to do.
LHA rates were frozen for four years in 2016 and CIH is warning that they have fallen so far behind even the cheapest rents that private renting has become unaffordable for most low income tenants – putting them at risk of homelessness as they are forced to choose between basic living expenses and paying the shortfall. The organisation is calling on the government to review the policy and to end the freeze immediately.
LHA rates are meant to cover the cheapest 30 per cent of homes in any given area. But they haven’t been increased in line with local rents since April 2013 and they remain frozen until April 2020. As a result, renters are facing gaps ranging from £25 a month on a single room in a shared home outside London to more than £260 a month on one to four-bedroom homes in some areas of London. Over 12 months, those gaps rise to £300 and £3,120 – making it increasingly likely that renters will be forced to choose between paying for basic necessities like food and heating or their rent.
The government introduced targeted affordability funding in 2014 to bridge the biggest gaps but CIH’s new report has found that its impact has been negligible, covering only a handful of the shortfalls completely.
CIH chief executive Terrie Alafat CBE said: “Our research makes it clear just how far housing benefit for private renters has failed to keep pace with even the cheapest private rents. We fear this policy is putting thousands of private renters on low incomes at risk of poverty and homelessness.
“We are calling on the government to conduct an immediate review and to look at ending the freeze on Local Housing Allowance.”
Matt Downie, director of policy and external affairs at Crisis, said: “This report highlights just how much housing benefits for private renters are falling short of the levels needed, leaving many homeless people stuck in a desperate situation and putting yet more people at risk of homelessness. There are 236,000 people across Britain experiencing the worst forms of homelessness – this includes those sleeping on the streets, living in unsuitable hostels, and sofa-surfing. In many of these cases, people simply can’t find a home because there isn’t enough social housing and housing benefits are too low to cover private rents.
“Homelessness is not inevitable – there is clear evidence that it can be ended with the right policies in place. The government must urgently reform housing benefits for private renters, so they not only match the true cost of renting but also keep pace with future rent changes.”
CIH said the policy is hitting single people aged under 25 particularly hard, because they are only entitled to LHA to cover the rent on a bedroom in a shared home. Even small gaps between their LHA and their rent can be serious because the levels of other benefits they may be entitled to (for example Jobseeker’s Allowance) are also much lower. CIH policy and practice officer Sam Lister, who wrote the report, said general benefit rates for single people aged under 25 are too low to contribute towards any gap without putting them at significant risk of homelessness.
CIH said their LHA rates should be restored to the 30th percentile rent with immediate effect.