Local Housing Allowance freeze fuelling homelessness

New analysis by London Councils shows a significant reduction in the number of homes affordable to Londoners receiving Local Housing Allowance (LHA) over the past four years.

London Councils has calculated that below 15 per cent of private sector rents across the capital are covered by LHA rates. People who are eligible for LHA receive it as part of their housing benefit or Universal Credit payment to cover their housing costs if they have a private landlord. In areas such as Outer South West London, not a single property is affordable for single claimants looking for a room in a shared house.

Additionally, 45 per cent of the almost 200,000 low-income London households claiming LHA for private sector properties do not receive enough housing benefit to cover their rent. Such households face an average shortfall of £50.71 per week, with households trying to bridge the gap through cutting back on essential spending and facing rent arrears, putting them in danger of becoming homeless.

Boroughs believe that the trend of overcrowding is due to the lack of affordable accommodation at an appropriate size. In total, 19 per cent of claimants across the capital live in properties with fewer bedrooms than they are entitled to – with this rising to a third of claimants in some areas.

The organisation is urging the government to boost LHA so that claimants can afford at least the lowest 30 per cent of local market rents. Boroughs believe this would help prevent homelessness for thousands of Londoners, while reducing the wider costs to the public sector that homelessness creates.  

Muhammed Butt, London Councils’ executive member for welfare, empowerment and inclusion, said: “The counterproductive LHA freeze is fuelling London’s skyrocketing rates of homelessness. Keeping LHA frozen during a period of fast-rising rents has made private renting in the capital increasingly unaffordable. The resulting pressures on household finances are immense and a crucial factor in the increase in homelessness, with the number of homeless households in London 50 per cent higher at the end of 2017/18 compared to 2010/11.

“Bringing LHA back up so that claimants could afford at least 30 per cent of local housing in the private rented sector would significantly improve accommodation options for Londoners and would represent a big step forward in tackling homelessness in the capital.”

Greg Beales, campaign director at Shelter, said: “When housing benefit is so low that people are having to find over £50 of week to cover even the lowest rents, they face grim decisions between food, electric bills and keeping a roof over their head.

“The problem isn’t just confined to London, there is a gap between LHA and the bottom third of rents in 97 per cent of areas across the country. The benefits freeze is pricing people out of anywhere to call home, and directly stoking the homelessness crisis. We urge the government to lift the freeze and raise housing benefit so it can actually cover rent, or we will keep seeing people pushed into poverty and homelessness as a result.”