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The Chartered Institute of Housing is the independent voice for housing and the home of professional standards

Gap between LHA and rents putting private rents 'out of reach'

31/03/2017


The gap between the help with housing costs that young, single people in the private sector get and their rents is making housing virtually inaccessible, new research has revealed.

Chartered Institute of Housing research reveals in some areas the gap between the shared room rate of the local housing allowance (LHA), which single people who are under 35 and renting in the private sector receive to contribute to their housing costs, and the cheapest private rents in the area, means virtually all of the properties are out of reach.

LHA is intended to help people access property in the cheapest 30 per cent of the private rental market but in some areas the gap between the LHA rate and the cheapest properties is now more than £30 a week.

CIH’s research shows that in the 46 rental markets in England where the cash shortfall was greatest less than a quarter of private rented homes were available at the LHA. In 17 of those areas ten per cent or less of the market is affordable and in six five per cent or less is affordable.

Terrie Alafat CBE, the chief executive of the Chartered Institute of Housing, said: “The results of this research are extremely worrying and highlight the extent to which housing is simply out of reach for many young, single people.

“LHA is supposed to give people access to the cheapest third of private homes in their area, but the gap between LHA and rents has grown so large in some areas that it wouldn’t cover rent on the majority of the homes available.

“This is particularly worrying given the freeze on LHA rates until 2020 at a time when private rents are continuing to increase.

“We fear this means that housing at truly affordable rents will become increasingly out of reach for young people and that this will increase their risk of becoming homeless.

“We would urge the government to review LHA rates as this research highlights they clearly no longer reflect the price of renting in the private market in many areas.”

Research methodology

1) For each broad rental market area (BRMA) in England we compared the 2016 LHA figure for shared accommodation with the rent officer’s figure showing the upper price limit for rents for the cheapest third (30%) of homes (the ‘30th percentile rent’). Both figures are published in the Government’s valuation office agency tables. From this we identified the areas with the largest cash shortfalls.

2) In each of these areas we looked at the rent officers list of rents for shared accommodation available on the LHA Direct website. The list of rents is rent officers complete data set used to calculate the 30th percentile rent. Each rent is sorted in ascending order (from the lowest to the highest) the results are published in a graph. This graph was used to calculate the proportion of rents in an area would actually still be covered by the current LHA rate (for example 20% instead of 30%).

3) Our revised calculation fully takes account of targeted affordability funding that the government makes available to mitigate the effect of the LHA freeze in the worst affected areas.

4) There are 152 broad rental market areas in England. Our earlier study Mind the Gap published the equivalent estimates for rental markets in Scotland, Wales and Northern Ireland, as calculated for us by each devolved administration.


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