Frozen housing benefit fails to cover cheapest rents: CIH

More than 90% of Local Housing Allowance rates across Great Britain now fail to cover the cheapest rents, as they were originally designed to do, according to the Chartered Institute of Housing.

Related topics:  Finance
Rozi Jones
30th August 2018
Landlord rent hand 3
"Our research makes it clear just how far housing benefit for private renters has failed to keep pace with even the cheapest private rents."

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. CIH is calling on the UK 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, 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 across some Broad Rental Market Areas, including Glasgow and Edinburgh are facing gaps of over £10 a week on a single room in a shared home, while tenants with properties of between one to four bedrooms have even larger gaps between LHA rate and rent.

Over 12 months, some of the larger properties in Glasgow and East Dunbartonshire will have a gap of over £1,000, making it increasingly likely that renters will be forced to choose between paying for basic necessities like food and heating or their rent.

The UK Government introduced targeted affordability funding in 2014 to bridge the biggest gaps but CIH’s report has found that its impact has been "negligible, covering only a handful of the shortfalls completely".

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 Scotland director, Annie Mauger, 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 UK Government to conduct an immediate review and to look at ending the freeze on Local Housing Allowance.”

David Smith, policy director for the Residential Landlords Association, commented: “Today’s report is a reminder of the difficulties being faced by young people especially in accessing homes for private rent.

“With many unable to afford a home of their own, and waiting lists for social housing remaining long, we need to do more to support those who desperately need a thriving private rental market to provide the homes they need and to sustain existing tenancies. This means lifting the Housing Allowance freeze so that it better matches the realities of today’s private rental prices.

“Such a policy would not lead to substantial increases in Government spending. Official data shows that in the year to July 2018, private sector rents across Britain increased by just 0.9 per cent, far less than inflation.”

 

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