The Mayor of Tower Hamlets has written to the Secretary of State for Housing, Communities and Local Government to welcome the increase in Local Housing Allowance (LHA) rates in the wake of the coronavirus pandemic, but also to warn that the increase doesn’t go far enough for inner London areas such as Tower Hamlets where rents are far higher than elsewhere in the country.
The Chancellor announced in March that he would increase LHA rates to cover the lowest 30th percentile of market rents. This reversed the LHA rate freeze introduced by George Osborne in 2016, however Mayor Biggs has highlighted that this increase doesn’t close the gap for areas with higher rents like Tower Hamlets.
LHA rates are set by the government and are used to calculate Housing Benefit for tenants renting from private landlords however a series of cuts to the rates since 2011, including a four-year freeze to the rates from 2016, meant there was a significant gap between the LHA support offered and the actual cost of rents leaving many people unable to pay their rent.
Although the new rates do make up some of the difference, the Mayor’s letter to Robert Jenrick MP shows that if you compare the new LHA rates to median rents in Tower Hamlets there are still shortfalls ranging from £57 a month for someone in a 1 bedroom in a shared property, up to a £163 shortfall a month for a 4 bed property.
Mayor Biggs urges the Government to look again at the rates to ensure they ‘reflect local circumstances so residents are not struggling to pay their rent’ and asks that additional long-term protections for tenancies are introduced to provide piece of mind during, and after, the pandemic.
Mayor of Tower Hamlets John Biggs said: “I welcome the increase to Local Housing Allowance rates that the Government has announced in response to the coronavirus pandemic. This was the right thing to do, but we need them to go further. Areas like Tower Hamlets have significantly higher rents than other places and the rates need to reflect that fact.
“For the average renter in Tower Hamlets the increase in LHA rates will not insulate them from the drop in income they will face from this crisis. The Government needs to look again at the rates to ensure they reflect local circumstances.”
Cllr Sirajul Islam, Deputy Mayor and Cabinet Member for Housing, said: “Reversing the LHA rate freeze will definitely help many people across the country, but during these unprecedented times people need all the help and support they can get. The new rates are a step in the right direction but compared to median rents in our borough, the rates will still mean a significant shortfall for many tenants and this needs to change.
“We also welcome the Government’s measures to prevent evictions, but we’re concerned that as workers’ incomes drop they will be at risk of falling behind on rent payments and will be in a really dangerous position when the eviction protections are lifted. We think the Government needs to introduce more long-term protections for renters.”
Full text of the letter sent:
Dear Secretary of State,
I welcome the increase to Local Housing Allowance (LHA) that the government announced in response to Coronavirus (COVID-19). However I am writing to ask that you consider offering additional support through LHA for people who face higher rent levels in boroughs like Tower Hamlets.
Across many parts of the country the increase you announced will help make up the shortfall between incomes and rents. However due to the high rents my residents pay it still falls far short. Even before this crisis Local Housing Allowance was out of step with median rents in many inner city areas and now as people see their income decrease those who were just about managing will be left in a vulnerable position. If you compare the new LHA rates to median rents in Tower Hamlets it still shows shortfalls ranging from £57 a month for someone in a 1 bedroom in a shared property – up to a £163 shortfall a month for a 4 bed property.
The additional protection to prevent evictions the government announced is another welcome measure for renters. However where people are only going to receive 80% of their income, or only be entitled to statutory sick pay or Universal Credit they will see their income drop. The risk remains that if people get behind on their rent they will be left in a precarious position when those protections are lifted.
For the average renter in my borough the increase in LHA will not insulate them from the drop in income they will face from this crisis. I ask that you look again at the rates to reflect local circumstances particularly in London so my residents are not struggling to pay their rent. I also urge you to consider additional longer term protections around tenancies to give people piece of mind during this difficult time.
Concerning protections, the council and voluntary sector partners have already seen a significant increase in private tenants unable to afford rent and consequently facing harassment by their landlord. Renters are having difficulties agreeing rent payment arrangements with their landlords and I am concerned that large numbers of renters who cannot afford rent will accrue sizeable arrears and face eviction when the ban ends on 30th September. It is vital that the most vulnerable renters are protected from homelessness through government introducing measures such as extending the eviction ban, a review of fines for landlords prosecuted for illegal evictions, a grace period in which tenants may pay back arrears or through some form of debt relief.
I look forward to hearing from you.
John Biggs – Mayor of Tower Hamlets