THE BLOG

Housing Benefit: The Black Hole That Continues To Grow

26/06/2017 09:09
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Something deeply worrying has happened to our private rented market. Since 2011, as benefits have been cut back, a black hole has started to appear in our welfare system for private renters. This black hole is the widening gap between housing benefit and rents at the very cheapest end of the private rental market.

The black hole means rents become completely out of reach for anyone on low earnings. It means more people are made homeless, more children are stuck in temporary accommodation for years and more families are pushed into the clutches of bad landlords.

And if the government doesn't address it, this black hole will soon become supermassive.
This week, Shelter published a report detailing the barriers that low-income households face in securing a new home in the private rented sector. At the top of the list is the fact that in the majority of the country, housing benefit no longer cover rents at the bottom 25% of the market.

For our report, we talked to Shelter advisers who every day help people struggling with housing problems. They describe how preventing homelessness is becoming harder for families on lower incomes.

This is because while housing benefit rates for private renters have been frozen by the government, private rents have continued to climb.

We calculate that if something doesn't change before 2019/20, the gap between housing benefit rates and local rents will have grown so much that the black hole in Britain will be worth £1.9billion. More than one million people will be affected by this. And few have the resources to sustainably cover the increasing shortfalls.

One adviser at Shelter Sheffield said: "We've got a significant number of people reliant on benefits and they are really struggling to access private rentals... even if you can get a tenancy, there will often be a shortfall in your benefits and you'll have to top up, but you won't be able to do that."
This is a story repeated throughout the country. In fact, Shelter has published research previously that has shown that by 2019/20, four fifths (83%) of England will be unaffordable to those on housing benefit.

Affordability is by no means the only problem renters on low earnings face in accessing the private rental market. Delays and complications in housing benefit and Universal Credit impede people from making the rent. Many people are unable to cobble together the upfront costs, such as letting agent fees and deposits. Our survey data show that a majority of private landlords prefer not to rent to housing benefit claimants.

So what should we do about it? Long-term, we need a massive increase in genuinely affordable homes for rent - but the impact of that would take years to show.

So in the short-term, the only realistic option we have is to end the freeze on housing benefit, so that people are able to find a place to live, which requires the government to sit down and work out a fair rate to allow low-income tenants to access a decent portion of the local market.
Without this, homelessness will continue to increase and people will continue to languish in temporary accommodation. And the later the government addresses it, the more massive the black hole will grow.

Heather Spurr is a policy officer at Shelter

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