Some welcome respite for housing benefit

Shelter’s main ask going into the Autumn Budget was for the government to lift the freeze to Local Housing Allowance (LHA) in order to stem the rise in homelessness seen in the private rented sector.

Local Housing Allowance – the type of housing benefit for private renters – has been cut every year since 2011. It has frequently been one of the first benefits in line when the Treasury has gone looking for Budget savings, and private renters have seen the support they are entitled repeatedly cut, capped or frozen – even while rents have continued to rise.

The rise in homelessness

It’s no coincidence that homelessness has increased over the same period. In particular, the number of households who have become homeless after losing a private rented tenancy has soared by 135% over the past seven years.

As a service provider, we are seeing people – including many in work – who are simply unable to afford somewhere to rent privately and as a result are forced to turn to their council to help. Others are clinging on to a private tenancy, but often by overcrowding or accepting poor conditions.

The National Audit Office looked in more detail at what has been fuelling the rise in homelessness. It found that the decreased affordability of tenancies was ‘likely to have contributed to the increase in homelessness’ and ‘changes to Local Housing Allowance are likely to have contributed to the affordability of tenancies for those on benefits, and are an element of the increase in homelessness’.

In particular, reductions in welfare combined with rising rents have made properties less affordable ‘which in turn is likely to be contributing to homelessness caused by the ending of an assured shorthold tenancy’.

To help ease the pressure, we have been calling on the government to bring LHA rates back in line with actual rents. Like other benefits for working age people, LHA rates are frozen until 2020 – meaning the help available for people is drifting increasingly out of step with housing costs.

The Autumn Budget

Unsurprisingly, Phillip Hammond did not backtrack on his headline freeze in yesterday’s Budget. But there was a significant concession announced to help areas squeezed most by the freeze.

The Treasury has now committed to spending 50% of the savings from the LHA freeze on boosting LHA rates in particularly unaffordable areas through the Targeted Affordability Fund. What it’s taken with one hand it’s now – partially – giving with the other. An extra £40 million will be made available in 2018–19 and £85 million in 201–-20 to ease pressure for approximately 140,000 households.

This falls short of our central ask to ensure LHA rates everywhere keep pace with rising rents. But amid a Budget that continued the overall restraint on social security spending, it’s a vital concession and recognition that the housing benefit cuts have gone too far. The Treasury deserve credit for listening to widely-held concerns.

Failure to look at housing benefit would have made a mockery of the government’s commitment to reducing homelessness and re-announcement of its Homelessness Reduction Taskforce. The rise in homelessness can only be reduced by ensuring people have access to affordable homes. In the long-term this means the government committing to a meaningful increase in genuinely affordable housing, but as a first step, an adequate safety net for people hardest hit by the housing crisis is essential.