New research from the National Housing Federation (NHF) shows that more than nine in ten homes for private rent (94%) in England are too expensive for those on housing benefit.
The NHF analysed 75,000 rental homes advertised on Zoopla and compared the cost of rent for each property with the rate of Local Housing Allowance that a family requiring that sized property would be entitled to. 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 and were initially designed to cover the bottom 50% of market rents in any area. 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.
The research found that in Inner East London, covering the majority of Tower Hamlets, just 39 out of 817 (4.77%) of private rental properties were affordable to those claiming benefits. Across London the research shows that 942 out of 19107 (4.93%) of private rental properties were affordable.
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.
Last month the Mayor of Tower Hamlets John Biggs publicly backed a campaign from the homelessness charity Crisis, calling for the government to urgently address the gap between Local Housing Allowance rates and private sector rents.
Mayor of Tower Hamlets John Biggs said: “These are shocking statistics from the National Housing Federation which show that the benefits freeze is pricing many families out of a place to call home. This research is further evidence that the government needs to address the significant gap between the support offered to private tenants and the rents they have to pay. It can do this very quickly by ending the freeze and increasing LHA rates.”
Deputy Mayor for Housing, Cllr Sirajul Islam, said: “Losing a private tenancy is one of the most common causes of homelessness and this new research shows that the widening gap between LHA rates and rents is leading to real hardship. As a council we’re committed to delivering 2,000 new council homes, but as the private rental market makes up a significant portion of housing in our borough we need the government to play its part too and set LHA rates that mean families on benefits can actually afford to rent here.”