The benefits freeze has put private renting out of reach for low-income tenants, and put them at increasing risk of homelessness.
A new report from the Chartered Institute of Housing shows that in 90% of cases, Local Housing Allowance is not enough to cover the cheapest rents as it was 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.
To stay in private rented accommodation, LHA renters have to make up the shortfall between LHA and their rent – but might then not have enough to pay for basic living costs.
The CIH is calling on the Government to review the policy and to end the freeze immediately.
LHA rates are meant to cover the cheapest 30% of homes in any given area.
However, they haven’t been increased in line with local rents since April 2013 and remain frozen until April 2020.
As a result, says the CIH, renters are facing shortfalls ranging from £25 a month on a single room in a shared home outside London to more than £260 a month in homes in 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.
CIH chief executive Terrie Alafat 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.”
Comments (3)
This will be controversial no doubt but, how many agents and landlords are fed up hearing the words “I /we are entitled to …”?
Within the past month I’ve had 2 tenants inform me that their partners have left so they are going ‘down the housing department ‘!
Housing allowance now seems the first resort for many rather than last resort, easier than looking for a second job to cover the shortfall? When we were younger back in the late 80’s early 90’s there was no such support, if there was we were not aware of it, so my wife at the time and I both got second jobs. Those second jobs meant that there was just about enough money to cover mortgage and living costs, we had no luxuries, I remember having a second hand TV set, buying bits at bootsales and jumble sales to save money. We had just 1 car, an old banger to get me to work 35 miles from home and to my evening job, my wife worked close to home.
The standing joke nowadays about i-phones, sky TV, having your hair and nails done is that it is what people see as the norm rather than luxuries.
As an aside, when I announced to one of my landlords that his tenants were “going down the housing”, his reply was something along the lines of -“so, I pay tax and council tax so that the council can give it back to me via my tenants as rent? Why should I, I’ve not worked hard for what I have just so someone else can take advantage, what about if I just stop paying my taxes now?” He gave notice!
Housing Benefit rates are only one issue. There’s Universal Credit, Council’s paying in arrears, clawing back over-payments, selective licensing, an atrocious Court system and IMHO the worst one of all – S24.
If a landlord can now see his tax bill rise several hundred percent then what choice has he/she got but to get the best possible price for the property they can achieve, or sell up. With the best will in the world that leaves out benefit tenants.
S24 is supported by the abomination known as Shelter. This ‘charity’ are systematically doing all that they can to shrink the PRS and it’s the low-paid and benefit tenants that will suffer. With landlords leaving the sector in their droves what else could anyone reasonably expect?
Of course the Build-To-Rent brigade will be rubbing their hands with glee as they see competition driven out and rents rise.
In Shelter’s last published accounts was an interesting sentence…. “Legal & General have collaborated with us on the development of our policy campaigns”. Isn’t it interesting that L&G are one of the biggest BTR companies in the country?
The Shelter web page showing corporate sponsors had the L&G logo on it till very recently. but now it’s vanished.
Landlords, tenants, councils, mortgage brokers and many other industry professionals openly state that landlords are leaving the sector because of S24, yet Shelter still makes no reference to it being a problem. Instead they use smoke and mirrors stating that ‘no fault evictions’ are the leading cause of homelessness. This is rubbish! It’s an outright attempt to mislead people. S21 is NOT a cause, it is a mechanism or procedure. The causes include non-payment of rent, anti-social behaviour and possible the biggest one by far is now the removal of mortgage interest relief.
This is a shambles and is only going to get worse until Government wake up and smell the coffee.
Excellent comments JMK would make good reading on one of shelters ludicrous posts about housing benefits applicants being discriminated against or S21 needing abolished on their page… some tenants may even take this on board as they seem brainwashed by shelter and generation rant these days and cannot see the bigger picture