The Mayor of Tower Hamlets has backed a new campaign from the homelessness charity Crisis, calling for the government to urgently address the gap between Local Housing Allowance rates and private sector rents.
Local Housing Allowance (LHA) rates are set by the government and are used to calculate Housing Benefit for tenants renting from private landlords.
LHA rates were created to help people pay their rent in the private rented sector however a series of cuts to the rates since 2011, including a four-year freeze to the rates since 2016, have meant they no longer cover the cost of rents. This means that many families cannot afford their rent, leading to rent arrears and in some cases homelessness.
In Tower Hamlets, the gap between LHA rates and the average private sector rent is significant: the LHA rate for a 4 bed property is £442p/w and yet the average rent for such a property is £618p/w. This translates to a gap of over £9,000 per year, meaning many families simply cannot afford their rent.
In a letter to the Chancellor of the Exchequer, Mayor Biggs writes that the government should immediately adopt the recommendations from Crisis and implement higher LHA rates which would ‘mark a significant step change in preventing homelessness.’ The Mayor also highlights that the gap between LHA rates and private sector rents is a significant problem in inner-city areas with higher rents such as Tower Hamlets.
Homelessness levels have soared since 2010. While rough sleeping is just one category of homelessness, it is estimated that rough sleeping across the country has increased by 165% since 2010.
Mayor of Tower Hamlets John Biggs said: “Homelessness across the UK has soared since 2010 and losing a private tenancy is one of the most common causes of homelessness. Despite this there is a significant gap between the support offered to private tenants and the rents they have to pay, often running to thousands of pounds per year. This has a devastating impact on families.
“The Chancellor’s latest spending review means yet another missed opportunity to make positive changes. I hope the Chancellor will reconsider and address the gap between LHA rates and private sector rents to help people cover the cost of their rent.”
Deputy Mayor for Housing, Cllr Sirajul Islam, said: “The Local Housing Allowance plays an important role in preventing homelessness but thanks to a series of cuts and a four-year freeze, the allowance now doesn’t cover the cost of private rent. This is simply unsustainable and it’s leading to rent arrears and in some cases homelessness.
“With the current housing crisis, homelessness is spiralling across the country. We need the government to build more but they can also make an immediate difference by investing in the Local Housing Allowance to ensure that struggling families can meet the cost of their rent.”
Jon Sparkes, Chief Executive of Crisis, said: “Everyone in our society should have the means to rent a safe, stable home where they can build their lives. But every day at Crisis, we know people are facing crippling stress and anxiety, unable to afford their rent and keep the roof over their head. The widening gap between LHA rates and rents mean that right now people are losing their homes and being left trapped in homelessness – and with one of our centres in the heart of Tower Hamlets, we experience just how often this is happening across this borough. We cannot allow this to continue.
“Restoring LHA rates to at least the cheapest third of local rents is the Government’s most immediate opportunity to help people currently locked in homelessness and prevent even more from becoming so in the first place. To experience these immediate human impacts though, we need to see cross party commitment to ensure investment back into LHA becomes a reality in upcoming spending decisions, which is why it is great to have the support of Mayor Biggs for our Cover the Cost campaign.
“We know that ending homelessness for good is truly within our capabilities but will only be made possible by taking the right steps to do so.”
Full text of the letter:
I write to you about the Local Housing Allowance (LHA) and its role in preventing homelessness.
As you will know the LHA was introduced in 2008 under the Labour government, but was subject to significant changes in 2011 under the Coalition government. The LHA rates were reduced, subject to below inflation increases and a four-year freeze since 2016.
The freeze is due to end in April 2020 and returning LHA rates to cover at least the cheapest third of private rents – as called for by the national homeless charity Crisis and several other expert organisations as part of their ‘Cover the Cost’ campaign – would mark a significant step change in preventing homelessness and alleviating extreme pressures on local government in areas of high housing need.
Low levels of LHA rates are resulting in thousands of families currently unable to afford rent in the private sector – a particularly serious issue in areas like Tower Hamlets with high inner-city private rents – and are therefore at increasing risk of becoming homeless. Here in Tower Hamlets, the gap between LHA rates and the average private sector rent is significant: the LHA rate for a 4 bed property is £442p/w and yet the average rent for such a property is £618p/w. This translates to a gap of over £9,000 per year, meaning many families simply cannot afford their rent.
Losing a private tenancy is currently one of the most common causes of homelessness in the UK and has been the leading cause in England for the past six years. Research by the Local Government Association in England found that 86% of responding councils identified private sector affordability as a barrier to rehousing people.
This, in turn, generates uncontrollable costs for councils by having to cover the difference in rent when placing households in expensive temporary accommodation, costing councils nearly £1bn a year – an unnecessary human cost and a false economy for local and national government.
Homelessness was massively reduced under the Labour government, but since 2010 we have seen the figures soar. As an example, it is estimated that rough sleeping across the country has increased by 165% since 2010. While rough sleeping is just one category of homelessness, it goes to show the depth of the problem we face as a country.
In the long-term, we clearly need to significantly increase the supply of council housing and genuinely affordable housing to address the root causes of the housing crisis we face. As a council we’re working hard to do just that with a pledge to deliver 2,000 new council homes. We are also buying properties in the borough to reduce the need to spend money on temporary accommodation and accommodation outside of the borough.
We also need the government to build more, but you can make an immediate difference by investing in LHA rates now and I would urge you to do just that. This would help struggling families across the country to cover the cost of their rent and keep their existing homes.
I noted that you did not mention LHA rates as part of the recent spending review, but I hope you will revisit this as part of the crucial action we need to tackle the housing crisis and the spiralling levels of homelessness we see across the country.
Mayor John Biggs
Executive Mayor of Tower Hamlets