ENDING the four-year freeze Government imposed on housing benefit rate rises is a “paltry” gesture that will do little to help people struggling to meet high housing costs, say industry figures.
The Department of Work & Pensions (DWP) announced yesterday that the freeze on Local Housing Allowance (LHA) rates put in place in 2016 will be “lifted”, allowing rates to rise by inflation from April. This will also apply to the housing element of Universal Credit.
The DWP says there are some 1.4 million in the private rented sector receiving LHA, and this move will provide around 900,000 of them an average of around £10 a month extra towards their rents.
“This Government is levelling up opportunity across the UK, and this will be a welcome increase for more than a million people as we provide more money to help pay for housing,” said minister for welfare delivery, Will Quince MP.
The gesture isn’t all that magnanimous, however. For one thing, the freeze was due to end in April 2020 anyway. For another, the impact of the freeze has seen an ever-widening gap emerge between LHA rates and rents, with tenants left to make up the shortfall from other sources of income or find a cheaper place; often an impossible choice.
Last year, the Chartered Institute of Housing (CIH) published research showing how even the very cheapest rents across large swathes of England had become unaffordable to people on LHA because of the impact of the freeze. What’s more, that report pointed out that even before the freeze was put in place in April 2016, LHA rates hadn’t risen in line with local rent rises since 2013.
Industry figures are less than impressed by the Government’s stance on the freeze and have called for the proper funding of housing benefits to more realistically reflect local housing costs. That, and take steps to deliver more genuinely affordable housing that will also serve to help reduce the demand for benefits.
“The benefit level needs to reflect the realities of the level of rents locally,” said John Stewart, policy manager at the Residential Landlords Association (RLA). “Given rents have risen by an average of 5%, and in some areas more than that over the last four years, a rise of 1.5% in the benefit level is not going to be much help to a tenant struggling to afford the rent in those areas and many others. If it really wants to help tenants, the Government should restore the direct link between rent levels and the LHA instead of a paltry flat rate increase.”
Jon Sparkes, chief executive of Crisis, said: “In our society everyone should be able to rent a safe, affordable home where they can thrive. So it’s extremely disappointing to see the Government’s decision to raise housing benefit in line with inflation: following years of cuts, [it] is just a drop in the ocean to what we know families need.
“Right now, across the country, people are battling to keep their head above water by going without food or missing a crucial bill payment just to be able to pay their rent. No one should be forced to live like this, especially when we know we have the means to fix it. Our research shows that by investing in housing benefit, so it covers the true cost of rents, the Government could lift more than 35,000 children out of poverty.
“Ultimately, making sure that everyone has a safe and secure home benefits us all. This is a missed opportunity for the Government to put their money where their mouth is and provide struggling families with a lifeline. It’s vital that the Government restores housing benefit to cover the cheapest third of rents.”
The Joseph Rowntree Foundation’s deputy director of policy and partnerships, Helen Barnard, called the ending of the freeze a “step in the right direction” but on its own it won’t be enough to alleviate poverty and homelessness.
“[W]e welcome this signal of a new approach for the decade ahead. But on its own this move won’t be enough to free people from being pulled into poverty and homelessness by high housing costs,” she added. “To halt homelessness and free people from in-work poverty, the Government must use the next Budget to ease the pressure on households struggling with high housing costs.
“Re-setting Local Housing Allowance rates to cover the bottom third of local rents would give people on low incomes the lifeline they urgently need when they’re being swept into poverty by rising rents. To turn the tide in the longer term we also need significant investment to increase the supply of truly affordable social housing. Without this, gains created in other areas, like higher pay and lower taxes, will continue to be lost.”
More must be done to help meet the challenges renters and councils face, said Councillor Richard Watts, chair the Local Government Association’s (LGA) resources board.
“Since LHA rates were frozen in 2016 they have fallen, on average, to just the thirteenth percentile of market rents. This means that in many parts of the country there are no properties available to those entitled to full support with their housing costs,” he added.
“Without investing in LHA rates to cover the true costs of renting, the gap many people face between their incomes and the cost of rent risks continuing to push many into financial hardship, in-work poverty and homelessness, and further stretch councils’ housing, homelessness and local welfare services.
“Everyone deserves a decent, secure and affordable home. Councils want to work with the Government in order to deliver the security that tenants need and support households who need help to meet their housing costs. As part of its forthcoming Budget, the Government [must] restore the LHA rate to at least the 30th percentile of market rents, something the LGA has long called for.”