Frozen out: welfare cuts make even cheapest private rents too expensive

PEOPLE on low incomes face a cruel dilemma – forego food or heat to help pay the shortfall – because housing benefit for private tenants no longer covers even the cheapest rent.

Research from the Chartered Institute of Housing (CIH) amounts to yet further evidence of the UK’s desperate need for more social housing, as those on the lowest incomes struggle with the double whammy of rising housing costs and the impact of welfare reform that has whittled away state support.

Local Housing Allowance (LHA), the housing benefit paid to private renters, was originally designed to cover the cheapest 30% of the local housing market, but according to the CIH’s research this is now no longer the case for 90% of the LHA rates across the UK.

The rate was frozen for four years in 2016, but the CIH has warned that it has fallen so far behind even the cheapest rents that private renting has become unaffordable for most low income tenants. For those caught in the bind, they are forced to choose between basic living expenses and paying the shortfall. Consequently, they face a much greater risk of become homeless.

LHA rates haven’t been increased in line with local rents since April 2013 and they remain frozen until April 2020. As a result, the gaps renters face range 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.

“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,” said CIH chief executive, Terrie Alafat CBE. “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 the homelessness charity Crisis, added: “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 LHA rates should be restored to the 30th percentile rent with immediate effect.



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