Covering the cost of renting

Everyone deserves a decent, secure and affordable home. That includes people who get support from housing benefit or Universal Credit to pay their rent in the private sector.

However, councils are increasingly concerned about people who are struggling to meet the cost of renting privately.

The local housing allowance (LHA) determines the maximum level of housing benefit, or support for housing costs within Universal Credit, that can be paid within a local area. In 2016, LHA rates were frozen by the Government, but are due to be reviewed at the end of this year.

The LGA is calling on ministers to take this opportunity to invest in LHA, so that it covers the true cost of renting.

This call is a key part of the LGA’s support for homelessness charity Crisis’s Cover the Cost campaign, which is being supported by a coalition of charities, and housing and local government organisations – including Shelter, Homeless Link, the Residential Landlords Association, St Mungo’s, the Joseph Rowntree Foundation, London Councils, the District Councils’ Network, Centrepoint, and the Chartered Institute of Housing.

The widening gap many people face between their incomes and the cost of rent has led many to experience financial hardship, in-work poverty and even homelessness. These serious issues are placing additional, unsustainable costs on councils in meeting their housing commitments and providing support.

Crisis’s latest report shows that restoring LHA rates to cover the cheapest third of rents could prevent more than 6,000 individuals and families from becoming homeless, and lift more than 32,000 individuals and families out of poverty, including 35,000 children.

It proposes that a three-year investment to restore rates to the 30th percentile would bring wider benefits of £5.5 billion, including from reduced need for homelessness services and related services such as health, and further savings of £124 million from reducing the need for temporary accommodation.

“The widening gap many people face between their incomes and rent has led to financial hardship, in-work poverty and even homelessness

In 2017, an LGA survey of housing managers found that 96 per cent of respondents were concerned that homelessness would continue to increase as a result of the LHA freeze. Councils also highlighted instances of private landlords withdrawing from renting to households in receipt of benefit, further constraining supply.

In ‘The Homeless Monitor England (2019)’ study, commissioned by Crisis and the Joseph Rowntree Foundation, nine out of 10 councils warned more and more people on the lowest incomes in their area will become homeless because the freeze on LHA and other benefits means they can’t afford to pay their rents.

I would urge all councillors to collate and share their findings and concerns, so the Government has the impetus to design an effective approach to housing costs when the LHA freeze is reviewed this autumn.

We need ministers to restore fairness to the system, so that we can work together to deliver our wider shared ambitions to end homelessness and improve outcomes for low-income households.

Investment in social housing is a vital part of the long-term solution, and we are pleased that government is working with councils to increase supply. But we urgently need to ensure that households can meet their living costs now, and LHA is a crucial part of that solution.

It is vital that our welfare system works effectively to provide a safety net for all those who need it.

For more information about Crisis’s Cover the Cost campaign, visit www.crisis.org.uk/get-involved/campaign/cover-the-cost. The LGA provides resources, research and support for councils on welfare reform, see www.local.gov.uk/topics/welfare-reform.

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