A united front to ending the LHA rate freeze

Published: by Steph Kleynhans

As we revealed last month, homelessness is continuing to rise. The causes and solutions to homelessness are heavily debated. But one thing is for sure – homelessness isn’t inevitable. It can be prevented.

Along with others, including local housing authorities, Shelter has long argued that benefits are to blame. Restrictions to Local Housing Allowance (LHA) rates are driving homelessness rates upwards. These increases are, also, making it difficult for local authorities to help families out of homelessness and into suitable accommodation.

Last year, landlords have also added their voices to this cause. In advance of the Autumn budget 2017, the Residential Landlords’ Association (RLA), along with many other organisations, signed our joint letter to the Chancellor of the Exchequer calling for an end to the LHA freeze.

It is therefore welcome that the RLA has gone one step further and recently published research showing that changes to LHA rates are driving the increase in homelessness from the private rented sector.

If organisations representing tenants, local authorities and landlords are united on this, surely it’s time the government takes action?

What the research shows

Last year we looked at the barriers faced by low-income households in securing housing within the private rental sector. Our research included a detailed look at the impact that LHA rates have had on the rise in homelessness.

Renting in the private sector is becoming increasingly difficult for low-income households because, while the housing allowance rates for private renters have been frozen since 2016, costs of private rents in England continue to rise year on year. This creates a gap between how much people receive for housing benefit and their rent; a shortfall they struggle to cover.

Our analysis found that in one in four areas of England (25%), a family with one or two children living in a two-bedroom property must find an extra £100 a month or more to make up that shortfall. In certain areas, such as Bristol or Cambridge, this can rise on average to £217 and £531 respectively. This is only set to get worse as the government plans to maintain the freeze on LHA until 2020, leaving private renters claiming LHA with growing shortfalls in rent and at higher risk of falling into arrears, eviction and homelessness.

All this is mirrored by the RLA’s research, undertaken by Manchester Metropolitan University. They too note that the ‘gap between LHA rates and market rents is significant and is growing.’ In the survey undertaken for this research one landlord called the LHA ‘a discredited value, as it has lost any connection, even using tortuous maths, with the market rent’.

The RLA’s research also finds the increasing shortfall in LHA is ‘leading to rent arrears, and in turn to tenancy terminations’. Around one in four (24%) of the landlords they surveyed reported the shortfall for their tenants was over £100 per month, matching Shelter’s research.

Most worrying of all, the RLA research reports that landlords who currently rent to LHA claimants ‘are looking to move out of this sector’. This is incredibly worrying considering almost a quarter of private renters in England claim LHA and claimants already struggle finding a private landlord to let to them.

There is disturbing evidence of people in receipt of housing benefit being turned away from properties just because they are receiving benefits. We don’t think this discrimination can be justified, however frustrating the benefit system is, and we’re calling on all landlords and letting agents to consider each renter on a case-by-case basis. However, even if we do reach a place where landlords and agents do assess everyone individually, many will still be shut out because LHA doesn’t cover the rent.

The RLA describe LHA rates as causing a ‘double whammy’ of both increasing the likelihood of tenancies ending through arrears, and then ‘reducing the chances of affected households finding suitably affordable, alternative accommodation’, leading to homelessness.

Ending the freeze and raising rates

The government last year acknowledged that ‘high and increasing costs in the private rented sector can impact upon tenants who struggle to pay, and these households are more likely to be at risk of becoming homeless’. It recently reported it has begun work to look at affordability in the private rented sector, with a view to developing policy options for post-2020 when the current LHA freeze ends.

But families struggling to find or afford a private rental can’t wait that long. With landlords adding their voice to those of homeless organisations and local government in reporting that LHA rates are leading to arrears, we need to see urgent action.

Housing benefit is a vital tool in preventing homelessness and hardship. The government must urgently ensure that it’s fit for purpose by ending the freeze and raising rates in line with rents.