New research from the Chartered Institute of Housing (CIH) shows that more than 90% of Local Housing Allowance rates across Great Britain now fail to cover the cheapest rents.
The institute is warning that rates have now fallen so far behind 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 now calling on the Government to review the policy and to end the freeze immediately – something the RLA has also been campaigning on for some time.
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 the capital.
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.
In a blog post last year the RLA called on the Government lift the LHA freeze in the PRS to prevent unnecessary homelessness.
The association also signed a cross sector letter warning the Government that ‘if the freeze is not lifted, previous research shows that more than one million households in Britain could be at risk of homelessness by 2020’.
Responding to the new research findings, David Smith, RLA policy director said: “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.”
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 said their LHA rates should be restored to the 30th percentile rent with immediate effect.
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.”