Local Housing Allowance freeze is fuelling homelessness

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New analysis by London Councils shows a significant reduction in the number of homes affordable to Londoners receiving Local Housing Allowance (LHA) over the past four years

People who are eligible for Local Housing Allowance receive it as part of their housing benefit or Universal Credit payment to cover their housing costs if they have a private landlord.

London Councils has calculated that only between 0 and 15% of private sector rents across the capital are covered by Local Housing Allowance rates. In areas such as Outer South West London, not a single property is affordable for single claimants looking for a room in a shared house.

London Councils’ research also found that almost half (45%) of the almost 200,000 low-income London households claiming LHA for private sector properties do not receive enough housing benefit to cover their rent.

These Londoners face an average shortfall of £50.71 per week, with households trying to bridge the gap through cutting back on essential spending such as food or utilities; or taking out loans. The financial pressures are pushing many into rent arrears, putting them in danger of becoming homeless.

London Councils’ analysis highlights that 19% of claimants across the capital live in properties with fewer bedrooms than they are entitled to – with this rising to a third of claimants in some areas – meaning that they are legally overcrowded. Boroughs believe this overcrowding is due to the lack of affordable accommodation at an appropriate size.

With a chronic shortage of social housing in the capital, many low-income Londoners depend on finding accommodation in London’s private rented sector. However, the government has introduced a series of changes to LHA since 2011, including a four-year freeze on LHA rates from April 2016, which has severely restricted the pool of properties affordable to London households who use the benefit to pay their rent.

London Councils is calling on the government to boost Local Housing Allowance so that claimants can afford at least the lowest 30% of local market rents. Boroughs believe this would help prevent homelessness for thousands of Londoners, while reducing the wider costs to the public sector that homelessness creates.

Councillor Muhammed Butt, London Councils’ executive member for welfare, empowerment and inclusion, said: “The counterproductive LHA freeze is fuelling London’s skyrocketing rates of homelessness.

“Keeping LHA frozen during a period of fast-rising rents has made private renting in the capital increasingly unaffordable. The resulting pressures on household finances are immense and a crucial factor in the increase in homelessness, with the number of homeless households in London 50% higher at the end of 2017/18 compared to 2010/11.

“Bringing LHA back up so that claimants could afford at least 30% of local housing in the private rented sector would significantly improve accommodation options for Londoners and would represent a big step forward in tackling homelessness in the capital.”

Greg Beales, campaign director at Shelter, said: “The problem isn’t just confined to London, there is a gap between LHA and the bottom third of rents in 97% of areas across the country.

“The benefits freeze is pricing people out of anywhere to call home, and directly stoking the homelessness crisis. We urge the government to lift the freeze and raise housing benefit so it can actually cover rent, or we will keep seeing people pushed into poverty and homelessness as a result.”

Around 54,000 homeless London households – including 87,000 children – currently live in temporary accommodation placements organised by the boroughs, accounting for almost 70% of the total in England.

As well as increasing the number of Londoners requiring temporary accommodation, the LHA restrictions have also made it harder for boroughs to find affordable accommodation to place homeless households.

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