Crisis campaign to restore LHA levels to market rents

by Property 118

11:48 AM, 2nd September 2019
About A year ago

Crisis campaign to restore LHA levels to market rents

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Crisis campaign to restore LHA levels to market rents

Restoring the levels of housing benefit, otherwise known as Local Housing Allowance (LHA), so they truly cover market rents has the potential to prevent more than 6,000 households from being pushed into homelessness and also lift more than 35,000 children out of poverty in the next three years in the UK.

As part of Crisis’ Cover the Cost campaign, new research released today, conducted by Alma Economics, outlines the three-year cost and benefit analysis of a Government investment of £3.3 billion in LHA for immediate net benefits of £2.1 billion (1). More specifically, the charity is calling for £820 million in the next year as part of upcoming spending decisions.

Lifting the benefits freeze and investing in LHA would help thousands currently on the brink of homelessness as they could truly cover the cost of the cheapest 30% of market rents. Restored levels of LHA would also help those already homeless to afford a rented home and significantly reduce the number of families and individuals turning to their local council for help – reducing the use of homelessness services and extremely expensive temporary accommodation.

Alongside the immediate net benefits of £2.1 billion over the three years, this would also give the Government time to build a sufficient supply of truly affordable housing in the years to come whilst ensuring that homelessness across the country doesn’t continue to rise.

LHA is the housing benefit aspect of Universal Credit, providing support to those on low incomes who are unable to meet the cost of private rent. LHA rates were originally set to ensure the recipient could afford the cheapest third of properties in their area, meaning most were able to access a safe and stable home to build their lives in.

But following series of cuts to LHA over the years – including a four-year freeze from 2016 – the rates are not keeping up with the cost of rents in most areas across the country, meaning safe, affordable housing is becoming increasingly difficult to find. With families and individuals often accumulating debt having to make up the shortfall between their LHA and rent, this mounting financial pressure means they are easily forced out of their home and into homelessness.

At its core, LHA provides the opportunity to prevent more people becoming homeless by providing the right support. This potential will only be fully reached though if it is sufficiently funded and helps provide the right level of financial security to those in vulnerable circumstances. This is why Crisis is now calling on the Government to commit to restoring the LHA rates so that they cover the true cost of rent.

Jon Sparkes, Chief Executive of Crisis, said: “Everyone in our society should have the means to rent a safe, stable home where they can build their lives. But every day at Crisis, we hear of the agonising stress and anxiety people face, unable to afford their rent and keep the roof over their head. Right now people are losing their homes and being left trapped in homelessness, unable to get back into adequate housing. We have to stop this happening.

“The UK Government has made commitments to end rough sleeping and reduce homelessness, but without addressing the root causes behind homelessness, it will sadly continue to rise. Long-term solutions like building more affordable social homes will take time so in the meantime, investing in LHA, so it covers the true cost of rents, provides the quickest and most effective opportunity to help those already homeless back into housing and for thousands more, prevent it from happening in the first place.

“Over the coming weeks, we urge the Government to prioritise investment in Local Housing Allowance as part of its upcoming spending decisions – this research makes a clear-cut case that doing so will have an immediate financial and human impact. Ending homelessness for good is truly within our capabilities but will only be made possible by taking steps like this.”

Terrie Alafat CBE, Chief Executive of the Chartered Institute of Housing, said: “The Chartered Institute of Housing is pleased to join Crisis and so many other organisations in calling on the government to restore local housing allowance to cover the most affordable 30% of rents.

“It is a national shame that thousands of families face being made homeless and councils are spending £1 billion a year on temporary accommodation because LHA is failing to do its job. Addressing this issue will bring the government significant savings in the benefit bill, as well as giving some of our most vulnerable fellow-citizens a more secure environment in which to live.

“A staggering 97% of private rents in England are currently simply unaffordable under benefit rules. This leaves thousands of families having to choose between paying their rent and feeding their children. The social and economic cost of this broken system simply cannot be justified.”


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Comments

Bill irvine

9:10 AM, 3rd September 2019
About A year ago

The Government has already given a commitment to remove the four year freeze on benefit rates, including the level of LHA rates. It remains to be seen, whether in one swoop, they'll restore the LHA 30th percentile rates. Concern remains this may not happen, certainly in the immediate future. Crisis and CIH's support for its restoration can only bolster similar demands made by landlords UK wide. An announcement is expected in the Autumn statement. Watch this space!

Denise G

9:16 AM, 3rd September 2019
About A year ago

I thought the last paragraph was worth re-posting on my own social media page - and then I had a little additional thought: does the current rate of LHA cover the rent in any Local Authority housing available either?
I have no idea if LA housing rent is significantly cheaper than private rent, but if it's not and the article chooses only to mention the unaffordability of private rents, then the paragraph (and the article) begin to look like just another weapon that Shelter et al will have in their armoury - which they will be able to utilise to demonise private landlords further - with the accusation being that it's only the PRS that increases homelessness due to rent rises.

Luke P

10:26 AM, 3rd September 2019
About A year ago

Reply to the comment left by Denise G at 03/09/2019 - 09:16
In Grimsby, the LHA rate (2-bed) is £92.05pw and that will just about get you a house in the areas people living on so little *should* live (let's call that 'tier 1'), but...these tenants don't want to live there and are content to put £20pw of 'their' money as a top-up towards the rent on a better property/better area (tier 2). The problem is that it's skewed the whole market as those who actually work for a living and should be in the properties considered a tier above those that benefit recipients really should be in are discovering limited supply. They do not want nor deserve to be in the very bottom tier 1 properties as they are getting on with life and earning a living, but equally do not have the luxury (as the benefit recipients do) of topping up to a 'tier 3' property, because they're working for all of it and it's not 'compartmentalised' into housing money/kids money/'my' money...

David Lawrenson

12:40 PM, 3rd September 2019
About A year ago

Unlike Shelter, Crisis are a charity that have always done some excellent, practical and useful work in the private rented sector - including research work like this and also their work on private rented sector access schemes with local authorities and other housing providers.

As landlords, we should build more bridges with them and just ignore Shelter.
Crisis are pragmatic and sensible, I have always found. They used to have a fantastic research resource on the PRS, which I used to use in the days when I was doing a lot of consulting with local auths and housing associations.

David Lawrenson
http://www.LettingFocus.com
Advice and consulting in the PRS

Michael Barnes

15:38 PM, 3rd September 2019
About A year ago

Reply to the comment left by Denise G at 03/09/2019 - 09:16
It is my understanding, but I have no reference, that "social housing" organisations are allowed to charge up to 90% of the open-market rate.

David Lawrenson

16:11 PM, 3rd September 2019
About A year ago

Reply to the comment left by Michael Barnes at 03/09/2019 - 15:38
...Yes and they often effectively discriminate against LHA tenants too. Not that this seems to concern Shelter.


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