Private rent unaffordable for most low income tenants says report

PRIVATE renting has become “unaffordable” for most low income tenants as housing benefit is “so seriously out of line” with local rents, research by a housing body has suggested.

A freeze on local housing allowance (LHA) rates since 2016 is putting low income private tenants at risk of homelessness or poverty, analysis from the Chartered Institute of Housing (CIH) warned.

The CIH report, entitled “Missing the Target? Is targeted affordability funding doing its job?”, said: “LHA rates are now so seriously out of line with local rents that private renting has become unaffordable for most low income tenants and this substantially increases their risk of homelessness.

“The longer the freeze continues, the wider the gap becomes and the more costly it becomes to restore LHA rates to their full value.”

According to the CIH’s figures, outside of London two out of every three LHA rates for shared accommodation have a weekly gap of £4 or more, while more than half of LHA rates for all other property sizes have weekly gaps of £10 or more.

In London, gaps were more than £10 for shared accommodation in every local housing market area and more than half of LHA rates for every other category of dwelling had gaps of at least £30.

The CIH argued that the impact of the Government’s targeted affordability funding introduced in 2014 to bridge the biggest gaps had been “negligible, covering only a handful of the shortfalls completely”.

The report stated: “Despite targeted affordability funding, less than 10% of LHA rates now cover the rent of the cheapest 30% of private homes. Or, to put it another way, over 90% of LHA rates now have a gap with the 30th percentile rent – and this is true for every category of dwelling except the two-bed rate where over 88% have a gap.”

The CIH said renters were facing gaps ranging from £25 a month on a single room in a shared home outside London to more than £260 a month on one to four-bedroom homes in some areas of London.

It added: “While the uprating freeze continues, without additional support targeted affordability funding is unable to stop the gap with local rents from widening and is failing to protect low income private tenants from exposure to a rising risk of homelessness and/or acute poverty.”

CIH chief executive Terrie Alafat said: “Our research makes it clear just how far housing benefit for private renters has failed to keep pace with even the cheapest private rents. We fear this policy is putting thousands of private renters on low incomes at risk of poverty and homelessness.

“We are calling on the Government to conduct an immediate review and to look at ending the freeze on local housing allowance.”

Councillor Judith Blake, Local Government Association housing spokeswoman, said: “We should now take the important step to lift the LHA freeze for private renters and connect it with real rents, which will be a massive step towards achieving our national ambition to end homelessness.

“Without addressing the gap between private rents and LHA, the number of homeless families and children that councils will need to house in temporary accommodation will continue to increase.”