Renters face affordability crisis despite LHA boost

Renters face affordability crisis despite LHA boost

0:04 AM, 11th December 2023, About 2 months ago 3

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Low-income renters in England will struggle to afford their homes even after the government’s recent benefit boost, a campaign group has warned.

Generation Rent said that the increase in Local Housing Allowance (LHA) announced by Jeremy Hunt in the Autumn Statement would be outpaced by rent inflation within 18 months.

That would leave many low-income households with a shortfall between their income and their rent.

LHA is for tenants receiving Universal Credit or Housing Benefit and is based on the 30th percentile of local rents, meaning that it covers the cheapest 30% of properties in an area.

Local Housing Allowance to cover private sector rents

The deputy chief executive of Generation Rent, Dan Wilson Craw, said: “Until we build enough social homes, millions of people on low incomes will rely on Local Housing Allowance to cover private sector rents.

“But the past failure of the government to take responsibility for record rent inflation has resulted in welfare support falling behind and putting tenants at risk of eviction and homelessness.

“Last month’s announcement of an increase in LHA is sorely needed but will be overtaken quickly by actual rents, and tenants facing painful decisions today will be in the same position in two years’ time.”

He added: “It is past time for the government to relink LHA with local rents permanently so support automatically adjusts to housing costs every year.”

LHA has been frozen since 2019

Generation Rent says that LHA has been frozen since 2019 but average rents have risen by 18.3% above the level of support.

And in the Autumn Statement, the Chancellor said that LHA would be increased to the 30th percentile of local rents from April 2024 – based on the average rents in the year to September 2023.

This would mean a 13.3% rise in LHA compared to the current levels.

Now the campaign group says it is forecasting that rents will continue to rise faster than LHA, reaching 8.5% higher than today and 14.2% higher than the reference rents by the end of 2025.

This would mean that the benefit boost would be almost wiped out by rent inflation, leaving affordability for low-income households almost as bad as it is currently.

Used a model to predict rent inflation

The group has used a model to predict rent inflation, based on wages, population and housing stock data, and the new rent index published by the Office for National Statistics (ONS).

According to its analysis, the average annual shortfall for a two-bedroom house across all rental areas in England would be £1,370 by the end of 2025.

For some renters, especially those seeking a new tenancy, the shortfall could be much higher.

Generation Rent is calling on the government to permanently relink LHA with actual rents, to ensure that households on low incomes can secure a tenancy and avoid the threat of eviction and homelessness.


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Comments

Easy rider

9:31 AM, 11th December 2023, About 2 months ago

The cost to the taxpayer for LHA is already around £30billion. The proposed unfreezing is only expected to cost the Treasury £1.4billion.

That is an increase of less than 5%. The cost of renting has increased by much more than 5% since 2020.

Something doesn’t add up.

The Forever Tenant

14:40 PM, 11th December 2023, About 2 months ago

Could be a regional thing, some rents have gone up more in some areas than others.

Depends where that 30th percentile lies. If 30% of landlords didn't increase rent then the LHA amount would not go up by much.

It could be that the government do not have the actual stats on what the 30th percentile is, or don't update their records. They still have showing as me paying the amount I was 4 years ago and not what I am now, despite repeatedly telling them.

It could be that it will actually cost a lot more. I guess we will find out eventually.

The Forever Tenant

15:42 PM, 11th December 2023, About 2 months ago

One thing I forgot to mention is that I kind of hope that when the increases come into place, that rents are not just increased by that amount in the area with landlords believing that tenants now have that extra money available each month.

I feel it would be a sure way to ensure that such raises don't happen again.

It sort of feels like the government want to get more money into the hands of the less well off to hopefully get the economy going properly again

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