Call for government action on gap between housing benefits and rent paid

Low-income tenants across England are facing a ‘housing black hole’ due to soaring rents and the freeze on housing benefit leaving a huge shortfall in genuinely affordable homes, according to a new report.

The research reveals that only 12% of rental properties listed in the last year were affordable to those in receipt of housing benefit.

The findings from Crisis and Zoopla, the property platform, reveal that nearly half of local authority areas in England had fewer than 20 affordable one-bed homes listed in a year.

And the charity warns that with evictions on the rise and homelessness numbers climbing in England, the growing pressure of unaffordable rents for those on low incomes, together with a chronic lack of supply of rented homes, looks likely to drive many more out of their homes.

One in four tenants are reliant on housing benefit

The research found that at the start of the year, one in four private renters in England (1.2 million households) were reliant on housing benefit to keep a roof over their heads.

By contrast, an analysis of Zoopla listings data found that fewer than one in eight properties available for rent last year were affordable to those in receipt of housing benefit, leaving tens of thousands facing shortfalls in rent amidst a cost-of-living crisis.

The research, which looks at new property listings for one, two and three-bed properties across England between May 2021 and April 2022 and their affordability compared to housing benefit rates, shows that average monthly rental prices are now 12% higher than they were before the pandemic.

But housing benefit has remained frozen since March 2020 and is based on rents from 2018-19.

Government committed to increasing other means-tested benefits

In May of this year, the government committed to increasing other means-tested benefits in line with inflation in April 2023, but it has so far ignored housing benefit.

The report also reveals that the shortfalls between housing benefit payments and rents are more than double what the most recent Government figures suggest – with low-income renters being forced to find, on average, an additional £648 for a one-bed, £1,052 for a two-bed and £1,655 for a three-bed a year compared to £313, £371 and £498, respectively.

These widening shortfalls come at a time when high inflation, skyrocketing energy bills and a chronic shortage of housing is leaving the poorest households with little room for manoeuvre.

The problem is most acute for one-bed homes – with the analysis showing that in almost 50% of local authorities, fewer than 20 such properties listed were affordable to people receiving housing benefit in the last year.

44% of renters are singles or couples with no children

This is despite 44% of private renters being singles or couples with no children and for who a one bed property would be the most suitable.

In a new partnership, Crisis and Zoopla have joined together to call on the government to urgently invest in housing benefit at the Autumn Budget if it wants to prevent thousands from being made homeless.

Matt Downie, the chief executive of Crisis, said: “It is deeply troubling that the poorest households in England are being forced to fight over a meagre number of affordable homes or stump up thousands they simply don’t have in order to find somewhere to live.

“We cannot sit idly by as people are left to battle against an increasingly turbulent and suffocating rental market while housing benefit – the only lifeline they have – is patently insufficient and unable to meet their needs.”

‘Government can no longer ignore rising rents’

He added: “Enough is enough. The Government can no longer ignore rising rents in the cost-of-living crisis – it must urgently invest in housing benefit so it covers the cheapest third of rents and put in place a plan to deliver the social homes we are crying out for, if people are to have a fighting chance at finding a home they can afford.”

Richard Donnell, the executive director at Zoopla, said: “The gap between housing benefit levels and actual rents is widening as demand for rented homes outpaces supply.

“There is a greater supply squeeze in the rental market than the sales market.

“This is being compounded by a growing number of private landlords exiting the market in the face of tax changes and greater regulation, a trend that looks set to continue.”

He added: “The challenge for national and local government is to encourage more supply across all tenures and a policy environment that continues to attract new investment into the rented sectors.”