Local Housing Allowance freeze risks 'increasing' homelessness for private renters, councils warn

Homelessness is at risk of increasing without further government action to lift the freeze on Local Housing Allowance (LHA) for families in private rented sector, councils warn today.


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The LHA is paid to low-income families in the private rented sector to help them cope with high housing costs. The rate is currently frozen despite private rented sector rents in England having risen by nearly 11 per cent in the last five years.

The Local Government Association, which represents more than 370 councils in England and Wales, said the Government’s decision to accept its call not to apply the restrictions to social and supported housing is a crucial step.

It is now calling on the Chancellor to use the Autumn Statement to go further and lift the LHA freeze in the private rented sector, so that they can reduce homelessness by preventing it happening, and work with landlords to provide suitable housing for those that need it.

A new survey of councils by the LGA reveals 96 per cent of responding councils are concerned that “homelessness would increase”, and 94 per cent said it would be “more difficult to meet the requirements” of the new Homelessness Reduction Act, if the freeze on the LHA were not lifted up until 2020.

As rents go up, the freeze on the level of Housing Benefit makes private renting less affordable for many families at risk of homelessness. Nine in 10 councils say private landlords in their area are renting fewer homes to low income households.

Ninety two per cent of responding councils said that lifting the freeze on LHA rates and better aligning them with rents would reduce homelessness.

With the unaffordability of private rented housing the current leading cause of homelessness, councils are warning that, without action to lift the freeze for private renters, homelessness will continue to increase. The Government’s ambition to successfully deliver the Homelessness Reduction Act may also not be achieved.

Councils are currently housing more than 77,000 homeless families in temporary accommodation including more than 120,000 children.

Cllr Judith Blake, the LGA’s Housing Spokesperson, said:

“Whenever homelessness occurs, it’s a tragedy. Re-building your life after losing your home requires support, and councils do all they can to help people get back on their feet.

“Councils want to end homelessness by preventing it happening in the first place. It is hugely positive that the Government has decided not to apply the LHA rate to families in social and supported housing.

“We should now take the important step to lift the LHA freeze for private renters and connect it with real rents, which will be massive step towards achieving our national ambition to end homelessness.

“At the root of our homelessness crisis is our shortage of affordable housing. We are pleased that the Government has acknowledged there is a need to build more council homes, but new homes will not appear overnight and the need is immediate.

“Without addressing the gap between private renters and LHA, the number of homeless families and children that councils will need to house in temporary accommodation will continue to increase, and our hopes to make a success of the Homelessness Reduction Act will fade.

“Councils want to build homes that their communities need. It is essential that the Chancellor lifts the housing borrowing cap and allows councils to retain 100 per cent of Right to Buy receipts in his Autumn Statement, enabling councils to borrow to build once more, and trigger the renaissance in council housebuilding that we desperately need.”

NOTES TO EDITORS

1.    The full survey is available upon request. 76 councils responded to the survey.

2.    Figures revealing over 77,000 households are currently in temporary accommodation come from the latest DCLG statistics.

3.    Local Housing Allowance, or LHA, is paid to households who are renting, to enable them to keep up with high housing costs. This is currently frozen for private renters, whilst rents are expected to rise by almost 5 per cent by 2020. More information on how rates are set is available at the Gov.uk website.

4.    Increases in private rents in England come from the ONS’ Private Rental Index.

5.      The LGA’s Autumn Budget submission includes proposals for how the Government lifting the freeze on Local Housing Allowance could support private renters


Our submission to the 2017 Autumn Budget sets out how, with the right funding and powers, councils can continue to lead their local areas.