Rising homelessness points to welfare reform blowback

The homelessness statistics are out again, and once again show a steady increase in the number of families losing their home. Popular perception is that people become homeless after some personal catastrophe – divorce, job loss, perhaps alcoholism. The real reasons stem far more from our dysfunctional housing market, as starkly underscored by the latest figures.

Nearly three in ten (27%) households accepted as homeless between April and June lost their home because their landlord simply decided to stop letting it to them. Private renting in the UK is insecure and renters sometimes forget how much they are at the mercy of their landlord. They may also overestimate the market’s ability to provide an affordable alternative if they do have to move.

These issues are increasingly problematic for those at the sharp end of the market. The loss of a private tenancy (AST) is the number one cause of homelessness and has been since late 2011. The proportion of households citing the loss of an AST as the trigger for their homelessness is now at an unprecedented high: between 2004 and 2009 it averaged just 13%, but this has been steadily increasing since mid-2010.

What’s changed in this period? Although today’s statistics cannot directly prove it, it’s hard not to draw the correlation with welfare reform. Housing benefit for private tenants (known as Local Housing Allowance) was cut in 2010. LHA tenants now only receive sufficient support to rent a home in the cheapest third of the market. To mitigate the risk of homelessness the Government staggered the introduction of these reforms, but by the end of 2012 all private tenants were on the new lower limits.

Unsurprisingly this move was not welcome by landlords, who have been made more nervous by the introduction of the overall benefit cap this summer. What appears to have happened is that landlords have either evicted tenants affected by cuts, or refused to renew tenancies if they fear families will struggle to pay in future.

The combination of landlord reluctance to let to housing benefit claimants and the difficulty of finding a property within LHA rates makes it less likely that a family evicted by one landlord will be able to find a new home they can afford. Whereas three or four years ago a household may have been able to re-house themselves if a landlord served notice, it now appears that low-income families have been left with no alternative but to turn to their local authority for help.

The figures on temporary accommodation reinforce this suspicion that landlords are withdrawing from any contact with renters on benefits. Local authorities frequently lease temporary accommodation from private landlords, but the number and proportion of such accommodation has also been steadily dropping: down from 58% three years ago to 44% now. Unsurprisingly, at the same time the number of families housed in unsuitable B&B accommodation has increased and now stands at a ten year high.

Shelter warned that LHA cuts risked increasing homelessness and Lord Freud himself acknowledged that the squeeze on LHA rates could reduce access to housing affordable to those on low-incomes. Ministers have pledged to review LHA rates if supply collapses. Today’s figures are clear evidence that there is a problem in private renting and the case for a review appears more pressing than ever. 

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One Comment
  1. I am in my 40s and have a 15 year old child. We have been homeless 3 times since he was born due to lack of affordable long term renting in Dorset. My health has been ruined by the stress that unstable housing has had on my work life. I have lost 3 jobs due to having to move great distances just to find private rentals that will take us. This has resulted in repeated periods on housing benefit, while I re-establish work and support in my new area. My current property is now £150 per month dearer than it was 3 years ago due to profiteering by my landlord, who owns mutiple private rentals and has put the price of all of them by similar levels. This market fixing is encouraged by local lettings agents who earn more in commission from higher rents. My property is now £150 pcm more than housing benefit will pay so should I lose my job or become too ill to work we will be forced out. This time there will be no affordable alternative as my income has fallen too far behind the rent increases. My Local Authority have run out of social housing so we are looking at a future in a tent, mirroring the terrible conditions the homeless of the USA are currently living in. The lack of willingness by the last 3 governments to provide affordable housing is going to drive families like mine into tent cities.

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