‘THE current freeze on housing benefit is pushing hundreds of thousands of private renters dangerously close to breaking point at a time when homelessness is rising,’ Graeme Brown, interim chief executive at Shelter, said on Monday.
‘For those hit by the freeze, housing benefit is failing to bridge the widening gap between eye-wateringly high private rents and incomes that simply can’t keep up. ‘Whether a struggling family or a young person in low paid work, people across the country face a grim uphill battle to keep a roof over their heads.
‘We’re calling on the government to abandon the housing benefit freeze, or risk making more people homeless. And ultimately, if the government wants to cut the welfare bill in the long-term, they need to focus their efforts on building genuinely affordable homes that low earners can actually afford.’
Brown was commenting as Shelter published its report Shut out: The barriers low-income households face in private renting, a devastating exposé of the hardship endured by the working class under the Tories’ control of housing benefit and the introduction of Universal Credit. A total of 4.5m households now live in privately rented housing.
Over the last 20 years, the private rented sector (PRS) has seen considerable expansion, and has grown to overtake the social rented sector. But the evidence suggests that even at a time of significant growth, it has become harder for people on low incomes to access the PRS. For people who rely on housing benefit to pay their rent, the barriers can be even higher.
Many families find they cannot afford a privately rented home, or encounter landlords unwilling to let to housing benefit claimants. As a result, Shelter’s advisers see increasing numbers of clients who have run out of options. An adviser at Shelter’s Bournemouth hub described how a family struggled to find a new home when the landlord decided to sell.
‘The wife was a deputy headmistress, the husband stayed at home with their four children. The family tried to find other private rented housing but the prices had gone up so much since they had moved into their original place that they were no longer in the sort of situation where it was easy to get the money together upfront, as well as affording the actual rent. So things had really changed for them and they said: “We’ve never gone anywhere for help but we don’t know what else we can do”.’
The inability to access a new home after losing a property in the private rented sector has become one of the main drivers of homelessness. Research by Shelter shows that 78% of the rise in homelessness since 2011 has been due to households losing their previous private tenancy.
The rise in homelessness because of the end of an assured shorthold tenancy ‘indicates that affordability is an increasingly significant issue, as more households facing the end of a private tenancy are unable to find an alternative without assistance’. Shelter’s briefing sets out the main barriers to low-income households accessing the PRS.
It also examines the wider housing market context, affordability, and Local Housing Allowance rates, the attitudes private landlords have towards low-income tenants, and the upfront costs and additional hurdles that bar tenants who might have been able to afford ongoing rents. A mother of two, aged 46, a former trainer for people with disabilities, said: ‘Every day I look at around 15 different estate agent sites online, trying to find properties. I find properties that would be suitable but they say no DSS, no pets, no smokers, no children.
‘I speak to agents most days trying to plead my case and I buy local papers trying to find somewhere to live. But I have had no luck at all… God knows what is going to happen to me, my son and my dog. The whole system is unfair, wrong and seriously needs to change. Landlords need to be more understanding with people receiving housing benefit.’
Housing market shifts, such as the inability of first-time buyers to purchase a home and the shortage of social rented housing, have led to an increasingly competitive private rental market. This competition has seen rents rise and allowed landlords to be choosier about who they let to. Consequently, rents that were once affordable have risen year-on-year, and housing benefit claimants are overlooked in favour of professional tenants.
Government changes to Local Housing Allowance (LHA), particularly the four-year freeze on LHA rates, has caused benefit rates to become increasingly misaligned with local rents. Research by Shelter shows that by 2019/20, four fifths (83%) of England will be unaffordable to LHA claimants.
Housing benefit administration acts as a barrier, with potential delays to payments and the setup of rent paid in arrears clashing with landlord business models. Wholesale ‘reform’ of the housing benefit system over the last ten years has exacerbated landlords’ reluctance to let to housing benefit claimants.
The transition from housing benefit to LHA put off some landlords from renting to low-income households and the current changeover to Universal Credit is causing others to introduce blanket policies against claimants. There is significant reluctance among private landlords to let to LHA claimants.
Although a large portion of the private rental market has historically been hostile towards housing benefit claimants, survey data suggests that landlord reluctance has actually increased. Welfare reforms, particularly the restrictions on LHA levels, have contributed towards the reticence of landlords to let to this group.
The upfront cost of private renting prohibits low-income households from accessing the PRS and means that many are forced to borrow, thus starting a tenancy in debt. For households experiencing multiple moves, the repeated costs of fees, deposits and rent in advance can pull them further into debt.
Shelter’s advice services report that private landlords are increasingly asking for ‘guarantors’, who can be next to impossible for low-income households to secure. Specialist PRS access schemes – schemes in the statutory and voluntary sector to help low-income households access a private rental – have helped a few applicants.
However, limited resources means that these schemes are often limited to statutory homeless families and are not widely publicised or available. Such programmes have met barriers, including the failure of LHA rates to keep up with market rents at the bottom end of the market. This limits the ability of access schemes to source properties that are affordable for their clients, and in turn, reduces landlords’ appetite to participate in such schemes.
PRS access schemes mostly do not, and cannot, aim to alter the structural barriers faced by low-income tenants. Instead, they aim to help tenants within current structural constraints, often with financial assistance.
The inaccessible PRS is fuelling increased homelessness. Growing numbers of families are trapped for years in temporary accommodation because local authorities struggle to secure accommodation for homeless households. It is leaving many low-income tenants with no choice but to accept poor conditions and bad landlords.
•A total of 14,420 households were accepted by local authorities as homeless between October and December 2016, up by more than 50% since 2009. The ending of a private tenancy is now the biggest cause of homelessness, as families that have lost their home struggle to secure a new rental.
•At the same time, tens of thousands of families are stuck in temporary accommodation, unable to move into a settled home. In December 2016, nearly 76,000 households were living in temporary accommodation, of which 60,000 were families with children or pregnant mothers. This is more than 10% up on the previous year, and 58% more since 2010 when just over 48,000 households were living in temporary accommodation.
•Local authorities are unable to use the PRS to meet their statutory duties to secure accommodation for homeless families. More than 80% of local authorities say they have found it difficult to help homeless applicants access private rented housing to prevent or resolve homelessness.
•When people on low incomes do manage to find an affordable private rental, it’s likely to be at the very lowest end of the market where standards are lower. Shelter reports that some families accept properties in desperation, and are forced to endure poor conditions and bad landlords.