Private rented housing is “out of reach” for under 35s, says the Chartered Institute of Housing

The Chartered Institute of Housing (CIH) recently carried out research into the gap between rents in the private rented sector and what Local Housing Allowance (LHA) will pay.

LHA is based on the 30th centile of the range rents charged in the private rented sector. Except it isn’t. That was how it was supposed to be (having previously been reduced from there 50th centile). In fact, the level of payment has been frozen for three years and will be frozen until 2019/20. LHA no longer reflects in any way the reality of rents in a locality.

In Brighton and Hove the rates are £82.66 for a room in a shared house, £153.02 for a one bed flat, £192.48 for a two bed property. The average one bed flat in Brighton and Hove is now £971 per month compared to LHA of £612.08 for the same period.

In Eastbourne the rates are £67.00, £116.53 and £151.50, and in Hastings £69.77, £92.06 and £120.29. (There are higher rates for 3 and 4 properties).

It is worse for you if you are under 35 where you are restricted to claiming LHA for just a room in a shared house.

And if you think it is bad for under 35s, it is EVEN worse for those under 21 for whom the rate is zero (unless you are ‘lucky’ enough to qualify for one of several exemptions – merely being a rough sleeper is not enough).

So what has the CIH found? It has found that the gap between LHA and rents has widened to the point where private rented housing is “out of reach” for under 35s.

A couple of weeks ago I wrote how the senior civil servant responsible for housing policy at the Department for Work and Pensions, Darrell Smith, said that the government is now going to use LHA rates to set new, lower rents for specialist supported housing. Why? Because it is such a good barometer for the market? No. He said: “The one advantage of (LHA rates) is that they are already there, so it doesn’t cost the government anything to set it up. I know”, he continued, “that isn’t a great answer but that’s all I have got”.

Is this the most depressing, mind-boggling, ridiculous justification ever from government?

The government announced in late 2015 that the rents that specialist supported housing services could charge and be paid for through housing benefit / Universal Credit would, from April 2019, be capped at Local Housing Allowance (LHA) rates. This move has been widely opposed because it is likely that many services would become financially unviable.

The government is currently consulting on how services can be protected and is considering a ring fenced pot to make up any shortfall. Yesterday I was at the consultation event in London looking at this very issue. I can’t say that the mood was particularly upbeat!

The problem with using LHA is that it has not kept up with the reality of local housing markets and, what is more, George Osborne froze the rate that LHA will be paid for the foreseeable future.

A small illustration: in Brighton and Hove the average one bedroom flat is currently £971 per month. LHA in the city is £612 per month.

There is an absurdity to link the payments for supported and sheltered housing tenants to LHA rates. LHA is meant to cover housing costs.  But it costs roughly the same to provide these services where ever you are in the country. As it happens, Brighton and Hove has a higher than average LHA rate, far higher than an area in the north of England yet it costs the same, for example, to maintain a lift in the north of England as it does in the south.

The LHA is a lousy guide to actual costs.

LHA was originally introduced to set the amount of housing benefit that would be paid to claimants who rented in the private rented sector. The figure was supposed to equate to the 30th centile of rents for properties in a locality.

But why is the government determined to base rents for specialist supported housing scheme on the LHA? This week we got an insight into its thinking, and I have to say it is most mind-boggling, ridiculous justifications I think I have ever heard. That view appears to be shared by the person who gave the justification.

At the National Housing Federation’s finance conference which took place in Liverpool last week, the manager for housing policy at the Department for Work and Pensions, Darrell Smith, said in response to a question as to why LHA rates are being used for setting benefit levels for supported housing, he said: “The one advantage of (LHA rates) is that they are already there, so it doesn’t cost government anything to set it up. I know that isn’t a great answer, but that’s all I have got.”

If that is the way that government is developing its strategy for those very services that support the most vulnerable members of our society, what hope is there?

Housing in Hastings: Difficulty in accessing the private rented sector

(This is the second in five posts regarding housing in Hastings based on a briefing paper prepared by my colleague Sue Hennell. Yesterday I wrote about Universal credit and how the six week wait for the first payment was causing problems for people trying to get accommodation in the private rented sector)

There are a number of reasons why there is more difficulty in accessing private rented accommodation in Hastings at this time.

The Local Housing Allowance Levels have not kept pace with rent increases:  The average monthly rent for a single room in a shared house in Hastings is £360 per calendar month and the Local Housing Allowance is £279, the shortfall per month is £81. For a tenant who is in receipt of Job Seekers Allowance at the rate of £57.90 (under 25s) or £73.10 (over 25s) per week this would mean using £18.69 per week to just cover their rent.  For a one bed room flat, the average rent is £426 per calendar month and the Local Housing Allowance is £368.20, the shortfall being £57.80 per month.  It is the same for families:

Number of bedrooms

Local Housing Allowance Average rent price in Hastings* Median rent price in Hastings*

2 bed

£521.26 £738.00 £693.00
3 bed £693.12 £890.00

£850.00

4 bed £847.69 £1,009.00

£936.00

*taken from Hastings Market Rent Summary (home.co.uk)

Reluctance to house people on benefits: Private sector landlords have always been reluctant to take tenants in receipt of Local Housing Allowance but it would appear they are even more reluctant with housing costs payments under Universal Credit. BHT’s Housing Access Project undertook a ‘secret shopping’ exercise with 25 local letting agents in Hastings in August 2016 and 75% said that they would not take on tenants in receipt of the Local Housing Allowance (this was before the full roll out of Universal Credit)  and the rest responded that they might possibly do so.

Rent in advance: Those private sector landlords that will take tenants in receipt of the above benefits require rent in advance, 6 weeks rent in advance, deposits, guarantors and fees. Whilst it is possible to get the rent in advance and deposit for one month via different routes (e.g. Hastings Borough Council) the 6 weeks rent in advance and access to guarantors is more difficult for people who are poor and/or claiming benefits.

Rental increases following welcomed improvements: Hastings introduced selective licensing for certain areas in order to address poor standards of housing. Whilst this is really good news some private sector landlord cannot afford to upgrade their properties so have pulled out of the market and where properties have been renovated rents have increased.

The question I asked yesterday was where will people live if social housing is not keeping up with need and private landlords are less willing to rent to claimants? I add a further point today: where will people live if they simply cannot afford the high cost of rents?

We are a nation in the midst of the worst housing crisis in living memory, if not ever. And it will only get worse.

If you are facing eviction due to rent arrears, get advice early from one of BHT’s Advice Centres in Hastings, Eastbourne and Brighton, the CAB or another advice centre.

Here are details of the BHT Advice Centres:

Brighton

Eastbourne

Hastings

Visible rough sleeping is a direct consequence of austerity

(This item first appeared in the Brighton Argus on 29th September 2016)

People living in tents in Brighton town centre should come as no surprise to anyone. It is a direct consequence of the housing crisis we are experiencing, not least in the south east.

The cost of renting a one bedroom flat in Brighton is now, on average, a little short of £1000 per month, well above the Local Housing Allowance of £612 per month, the amount that people on benefits can claim towards the rent of a one bedroom flat. The LHA has been frozen by central government making accommodation even more unaffordable

The rough sleeping situation in Brighton is more visible than ever before and, notwithstanding the excellent work of the City Council, several charities and others, the numbers on the streets can be expected to increase, an obvious and direct consequence of austerity.

Safety nets are under threat, and many have closed across the country. While those that remain work well for the lucky few, even they are now at risk from cuts and a government imposed cap on charges.

In the past I have been accused of scaremongering. However, the number and high-profile of those on our streets lends support to previous warnings regarding cuts to services and welfare benefits.

Needles in the parks is not something that should be confused with rough sleeping. Drug use impacts on people of all classes, housed or homeless, but needles disposed of carelessly should be condemned by all, as they pose a danger to all, not least rough sleepers.

The Government has announced its plans for supported housing – some positives, many worries

For the better part of a year I have been blogging on a regular basis about the threat to specialist supported housing services posed by the government’s announcement to cap rents to the maximum paid through the Local Housing Allowance (LHA). See here, here and here, for some examples.

BHT featured in a special report on Channel 4 News highlighting our concerns. Almost every other provider of specialist supported housing has also expressed their concern. The National Housing Federation launched a campaign in the summer to save supported housing.

The scale of the problem was recognised recently by Theresa May in response to a question from Jeremy Corbyn relating to the risk that the cap poses to women’s refuge services.

Last week the government announced its plans for the future funding of supported housing services. While there is some temporary relief, the risk remains of serious concern.

Rather than imposing the cap from April 2018, it is now scheduled to be imposed from April 2019.

damian-green

Rt Hon Damian Green MP

This, according to the Cabinet Minister, Damian Green MP, is to allow time for the details of the new future funding regime to be worked out and arrangements to be put in place.

Yet the government still intends to proceed with a 1% rent reduction for three years from April 2017.

There seems to be a certain lack of logic here. On the one hand the government is not implementing the LHA cap because it has heard concerns about the risk to the financial viability of specialist supported housing yet at the same time it is cutting income.

(It is worth remembering that the 1% reduction was a U-turn on a previous commitment by government made as recently as 2014 to allow increases in rents by CPI +1%).

It appears that the government intends that rent and service charges in specialist supported housing will be funded through housing benefit or universal credit up to the LHA rate.

To make up the shortfall, top up funding will be made available to local authorities and this will be ring fenced for support housing. Ring fencing is to be welcomed although there used to be ring fenced funding for supported housing as part of the old Supporting People regime but the government removed it a few years ago (2013 I think). As a consequence, warnings over the loss of funding for supported housing came true.

The government provides an assurance that there will be no loss of overall funding compared to current expenditure, But my serious concern is that the value of funding being made available to local authorities will be eroded in future years. Will it, for example, be indexed linked? And if LHA is frozen in the future, will the local pots be increased correspondingly or will there be an overall contraction in the amounts being committed by government?

Then there is the administrative costs associated with creating two systems from one. Currently it is all administered through housing benefit.  From 2019 local authorities will have to have additional staff in place to administer the local pots.  Where is the efficiency in that?  And who will pay for this additional, unnecessary cost?

Currently the funding is made available on a national basis. However, in the future, with the funding going to local authorities, will more mobile groups such as rough sleepers, ex-offenders and victims of domestic violence lose out if local connection rules become tighter, as I am sure they will?

One positive feature is the announcement that the Shared Accommodation Rate will not apply to people living in the supported housing sector which (if I understand it correctly) means that some of our specialist supported accommodation that would have been unaffordable for those under 35 will no longer be out of their reach. Unfortunately, the same exemption will not apply to our non-supported housing, resulting in many of our homes being beyond the reach of those under 35 who will remain eligible for rooms in shared houses only.

The devil will be in the detail. I’m not completely disheartened at this stage, but there are inherent risks in the limited detail that has been made available so far.

While there are some things to welcome in the announcement, there are many things that still cause me concern.  At least, I think, the government has heard the concerns BHT and others have expressed.

Theresa May throws a possible lifeline to women’s refuges, and must now do the same for specialist supported housing

Last December and January I possibly overstepped the mark on party political comment by being quite critical of government (see here and here). The issue related to the proposed cap on the benefits paid to residents of specialist supported housing, known as the Local Housing Allowance (LHA) Cap.

At first I felt quite a lone voice on that the issue which did not seem to be causing much concern in the housing sector.

The issue was then picked up by the then Shadow Housing Minister, John Healey, and he and BHT appeared in a special Channel 4 News feature. Since then it has become a mainstream concern in the social housing world.

Now it has cropped up on Prime Minister’s Questions when, last Wednesday, Jeremy Corbyn asked Theresa May to provide assurances that women’s refuges would not be subject to the cap.  This follows a warning from Women’s Aid that two out of three refuges might have to close.

Theresa_MayI was delighted with the Prime Minister’s response: “The right honourable gentleman raises a very important issue on the issue of domestic violence. We are doing all we can to stop these terrible crimes taking place and to provide support to the victims and survivors of these crimes. That’s why we are working on exempting refuges from the cap.”

This is great news for women’s refuges, but my concern is much, much wider. BHT’s own research says that many of our supported housing schemes will become unaffordable for anybody under the age of 35 and some accommodation will be unaffordable for those over 35.

Many housing associations are now reviewing their lettings policy to exclude lettings to those under 35 (who are eligible for lower rates of benefit).

I hope the Prime Minister will be able to say where all these young people will live when, currently, special supported housing is the only place that will accept many of them due to their particular needs.

The new Housing Minister, Gavin Barwell, recently said some very positive things about ending rough sleeping, but the LHA cap alone could see a deluge of young people ending up on the street.

Let us not forget that research has shown that every pound spent on especially supported housing saves the public purse £4.11. This return on investment, surely, provides a rationale for proper and stable investment in this vital, life-saving provision. The LHA cap is absolutely ill-conceived.

The government must abandon this ridiculous, damaging and dangerous proposal.

 

 

Building affordable homes is the way to control the housing benefit bill

(This item was first published in the Brighton Argus on 23rd August 2016)

Housing benefit payments to tenants in the private rented sector have doubled in the last ten years, to £9.3 billion a year.

Successive governments have tried to reduce this by capping payments to the equivalent of the cheapest 30% of privately rented homes.

The Local Housing Allowance cap is now frozen, ignoring spiralling rents in the private rented sector. Very few homes in Brighton are now covered by the LHA which caps payments for a one bedroom flat at £153.02 per week. The average rent for such properties is £244.50.

For those under 35 it is much worse with LHA capped at £82.66, supposedly the cost of a room in a shared house.

Housing benefit has not gone up because tenants are exploiting the system. They are very much the victims of a housing market in crisis, central to which is the loss of social housing with truly affordable rents.

Plans to encourage first time buyers are ineffectual for people in high cost areas like Brighton. The much vaunted Help to Buy ISA, where savers can get from government a 25% bonus towards the cost of their first home, looks like a hollow promise as the bonus will be paid only after the home is bought. It might help the better off, but not ordinary people.

We need a new national housing strategy, where homes are where people live, not investment opportunities. A huge building programme of homes for rent by councils and housing associations should be the cornerstone of this strategy.

That way the housing benefit bill can be brought back under control.