Rents are unsustainable and driving an inexorable rise in homelessness
By Chloe May and Research & Campaigns Team
Rents are unsustainable in the private sector with homelessness rising across England and Wales, new research shows.. At local and national level many councils are facing budget-busting costs to meet their statutory responsibilities.
In The Hidden Housing Tax national Citizens Advice says shortfalls in Local Housing Allowance (LHA) are causing ‘significant hardship’ for clients.
Many families are simply finding the continuing rise in prices unaffordable. The number living in temporary accommodation is at a 25-year-high. Among the consequences are widespread misery and insecurity and local councils facing bankruptcy.
An important cause of these problems is the inadequacy of Local Housing Allowance. LHA is a housing benefit for tenants living in the private sector but unable to afford their rent. Factors including the number of bedrooms a household needs and rents in the local Broad Rental Market Area (BRMA) decide its level.
When it started in 2008, the benefit paid for rents in the lower half of prices in each BRMA. In 2011 the government reduced this to 30%. It changed again in 2013 and was set to move with inflation, meaning it ran consistently behind market increases. In 2020, during the pandemic, the rate rose to cover the bottom 30%. Immediately afterwards however the government re-imposed the freeze it and the benefit declined proportionately as rents went on rising.
The result of the LHA freeze has been a shortfall in support for thousands of claimants averaging £750 a year.
We are calling on government to unfreeze the LHA so that housing benefit enables more households to pay their rent.
LHA has now lost touch with the inexorable rise in rents. CAEE local research this October showed no properties available using the LHA alone (table).
|Bedrooms||LHA per month||Average rent in Epsom & Ewell||Average shortfall|
Without an increase in the LHA it becomes more and more likely that people will find their rent unaffordable. Their only recourse is to apply to their local housing authority for emergency accommodation.
But this way forward too is beset with problems.
At a meeting of the EEBC Community and Wellbeing Committee in October members underlined the impact on council budgets of its statutory homelessness responsibilities. The Council reported a ‘significant financial outlay on temporary accommodation’ that was ‘likely to exceed the budget set for 2023-24’.
Fortunately on this occasion the committee could agree to use Homelessness Prevention Grant (HPG) and homelessness grant reserves to cover the anticipated shortfall.
A growing need for temporary accommodation is impacting councils under financial pressure everywhere. The District Councils Network confirms the dire position. Councils are reeling from the higher cost of providing temporary accommodation for many more families.*
Worst-hit councils are spending millions of pounds a year (up to 50% of total available financial resources) coping with rising homelessness. They point to other damaging consequences of the increased demand for emergency housing:
- Private landlords evicting tenants and then offering the property to the local council to use as temporary accommodation and charging a higher rent – a process known as “flipping”
- Families placed in temporary housing miles away from where they lived and their children’s school
- Councils in competition with the Home Office as housing contractors also look for accommodation for asylum-seekers.
At Citizens Advice, we believe that every family and individual deserves a decent place to live. The government must unfreeze LHA and immediately reinstate matching the lowest 30% of rental prices.
* The Local Government Association says the number of households in temporary accommodation has risen by 89% in a decade. In 2022-23 104,000 households (highest since records began in 1998) were costing councils at least £1.74 billion.