The Chartered Institute of Housing (CIH) has carried out research into Local Housing Allowance (LHA) and affordability. It has concluded that LHA, set at 30% (more accurately the 30th centile) of the market, is set too low in some areas. THE CIH says that in some areas tenants are only able to afford accommodation in the bottom 5% to 10% of the local market, not the lower 30% as it was designed to do.
Previously LHA was been set at 50% of the market.
Sometimes I wonder about the value of research, not because it doesn’t add value, but it tells you the bleeding obvious. In an area like Brighton and Hove, LHA enables claimants to afford accommodation in the cheapest 1% of accommodation in the private rented sector. In Brighton and Hove a one bedroom flat, for example, costs on average £970 per month. LHA will pay £612 for the same period.
The CIH is not only correct on their analysis but also their conclusion that the situation is likely to get worse as the government has announced that LHA rates are to be frozen for four years in an attempt to reduced the housing benefit bill.
The government might achieve that impact but it will mean people are driven further into poverty with fewer and fewer property being available for people on the lowest incomes, and will lead inevitably to an increase in homelessness.
The government must either introduce rent caps so that LHA has some bearing on rents in a locality, or the cap on LHA must go. The latter would see rents spiralling further out of control. It has to be rent caps.