The fabric of Britain as we know it is being ripped apart. So much is changing, almost behind our backs, we haven't got time to notice what is happening to us. And it is happening fast.

Tuesday, 17 January 2012

The Hidden Housing Crisis - an impending disaster

There is a crisis in the UK. Not one that the media pays enough attention to but it’s a shocker. Here are the statistics:
Picture: Shelter

1.8 million households on local authority registers
70,000 children spent this Christmas homeless
1.6 million children live in overcrowded, temporary or run down housing.

Consecutive governments have failed to build enough social housing to meet needs. Instead people on low incomes, who should have qualified for social housing, are encouraged to rent privately. They then get housing benefit to meet their private rents.

Claimants are not just layabouts: Shelter's chief executive Campbell Robb explains:

“The vast majority of housing benefit claimants are either pensioners, disabled people, those caring for a relative or hard-working people on low incomes, and only 1 in 8 people who receive housing benefit is unemployed

The much-publicised £400pw cap - which mainly affects large families or renters in expensive areas - is not all that is happening. The housing benefit rates have changed from being calculated on the bottom 50% of rents in a given area to the bottom 30%. This means that all across the UK, in all sized households, tenants face a shortfall between their rent and housing benefit.
Housing benefit is calculated within the Local Housing Allowance rules. Local housing allowance (LHA) rates are used to calculate housing benefit for tenants renting from private landlords. The rates depend on the area in which you are making a claim and are calculated each month. For example, the entitlement on a two bedroom property in Central London will be £290 per week; in Merthyr Cynon it will be a maximum of £80 a week for a two-bed home.

Last year I rented a two bedroom flat in Plymouth. The rent was £550 per month and met by housing benefit.

Now the maximum I would get would be £520 per month - leaving me with a £30 shortfall. A shortfall: when I have 2 kids in a small 2 bed flat a long, long way from London. Believe me, I wasn't living in an exclusive area!

Amidst rising food and fuel prices and other welfare cuts, even a small shortfall can be disastrous to a stretched budget.

The shortfall will vary across the country, if it is large it may mean moving or homelessness.

It is very likely to cause homelessness. Here's why:
  • Their landlord may not drop their rent and they also may not be able to afford the move to somewhere cheaper.
  • Usually renters need to give two months’ notice. Properties let very quickly and landlords won't wait two months, so this entails paying overlapping rents.
  • Also the landlord can legally withhold the deposit until after the tenant has left.
So tenants will have to pay overlapping rents, deposit plus one month’s rent in advance and removal costs. Inevitably this will lead to debt and, eventually, homelessness.

It  has already been estimated that 40,000 families could be made homeless by welfare changes: see this article from Shelter.
If Shelter's right, the changes will cost the nation more.
Temporary accommodation is expensive; it cost £400pw when I was in a council-funded B&B.

Picture: BBC
Many are hoping that the Housing Benefit cuts will be matched with rent cuts. This is unlikely: rents across the nation have been rising due to a high demand for homes – explained here. Landlords won't drop rents if others will be able to afford them. In many towns and cities there will be more claimants than affordable homes. Randeep Ramesh explains in The Guardian:

“It is unlikely that the poor will be able migrate to cheaper parts of the capital: in Newham, east London, there will be twice as many claimants as there are low-cost homes. In Croydon, 17,000 people will be chasing 10,000 properties.

“The effect will be felt not just in south-east England. Before today, Birmingham had more than 37,000 homes with rents affordable on welfare. Now 34,500 housing benefit claimants will be chasing 23,000 low-cost houses, according to the analysis, carried out for the Guardian. On the Mersey, 21,000 people collecting local housing allowance will only be able to afford 12,000 homes in Liverpool.

“Because welfare is set at Westminster, the cuts will also be felt in Scotland. In Glasgow there will be a thousand more benefit recipients than there are properties which can be rented with the government's reduced housing subsidy.”

There has also been a change to the shared room entitlement. Previously if you were under 25 you would only get enough for a bedsit or room in a shared house.  This has changed to under 35. It also applies to people currently living in one bedroom flats.

Using my home town of Plymouth again, just to prove this isn't a London centric issue, I'll examine how this would affect a newly-redundant 30-year-old with no kids, living in a rented one bedroom flat:

Job seeker's allowance is £67.50.

He would have also previously got £92.31 housing benefit for his one bedroom flat but now is only entitled to the £67 sharer's rate.

Total: down from £159.81 to £134.50 a week.

After making up his rent shortfall, he'll have just £42.19 left for food, bills and transport to interviews.

And that's only if he's in a cheap flat, with rent in the bottom 30% of the market ...

Find A Property put an average 1 bed in Plymouth at £109 per week.

Paying average rent, then, he would have £25.50 a week to live on.

He could move to a bedsit if he could find one cheap enough, and afford the move.

I hope this example demonstrates how this reform ruins the safety net for the average working person. If you are young and can afford a one bed flat with your wages, but then need temporary support due to redundancy or sickness, you may not get it. You may be faced with poverty or homelessness or get into massive debt funding a move you can't afford - when all you really needed was a short-term benefit until you find something else.

We all appreciate the peace of mind that an adequate welfare safety net provides. To know if sickness or redundancy hit us we will have a decent home and enough for life's essentials.

These housing benefit reforms, are therefore, an attack on all of us.

By Opinionated Mum.

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  1. Thanks for explaining this so clearly, OM. Your examples show clearly that housing benefit cuts are going to affect MORE working people than unemployed.

    Having to shift around from pillar to post, trying to fit within the new rules, will interfere with people's ability to work and their children's education.

    Worse, it will cause an awful wave of homelessness - while unpleasant landlords rent out tiny, unfit homes for as much as they can get. The homelessness will end up costing councils more as they have a duty to house residents. It's bonkers.

    Everybody should protest against this, even the 'benefit bashers'! Because this isn't about the unemployed and the long-term sick. It's about the woman on the checkout, the young lad at your garage, nurses and teaching assistants.

    1. i'm affected by the benefit changes, many people are under sustained attack from the tory dems government. it is depressing.

  2. An excellent blog piece - you make it very clear, and it is very depressing. More homelessness, more unscrupulous landlords, more social cleansing. All in all it's not good.

  3. Thank you for explaining the issues so well. We are hoping to move asap for exactly this reason. Main problem is that of the affordable rents (by which I mean those we can afford the top up - not even the lowest 30%) there appear to be no agencies/landlords accepting people on benefits. We are a low income working family. We can no longer afford the rent where we are so planning to move to a cheaper area. Unfortunately this means leaving current job and then the vicious circle really begins...

  4. I'm experiencing those problems now. I have £40 a week to live on cos the rest has to go towards my rent shortfall. Fair enough if I lived in a palacial pad in Hartley but I live in a grotty, disrepaired, damp flat in the Mutley area of Plymouth

  5. Excellent post and some incredibly pertinent points made. These caps are going to lead to incredible financial pressure for many on housing benefits, stretching already stretched budgets further. Were these cuts really made to realign the problem of underoccupied properties? While this may work in some instances, a great deal more will be put under increased financial pressure and the possibilities of homelessness, struggling to get placed in what little affordable housing there is available.

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  9. this week i received a letter from the councils benefit department. i am a 33 year old single guy. for 10 years i have rented alone or as part of a couple with my ex girlfriend. right now i rent a studio flat for 500 per month. until last week i got incapacity benefit. thats now changed to esa. because of illness and low income all the rent was paid. the recent letter says i am under 35 so the council will only pay 295 per month. under 35's cant be single and live alone now. we must share or live with mummy n daddy!!

    anyways this leaves me 200 short each month. with esa to top up payments its possible to affoard roof over head and some basics. if the dwp put me on jsa id be homeless straight away. this could happen to myself and anyone claiming esa in the work group. esa work is reviewed yearly and as such you could lose your entitlment to esa come next medical.

    i will be appealing the decision to put me in the work group. esa support get more cash and no review in a year. if i knew who where to get mental health help needed for a specific condition id have hope of working again. til docs can do that its a struggle. i could claim dla and such i suppose. much like the changes to housing benefit being a surprise, i didn't know about other disability help. we mental illness sufferers can miss things and we can be missed ou

  10. Great post. Just a note on your example of HB for those between 25 -35 being cut to the shared room rate - this will only cover the bottom 30% of shared rooms, so not likely to cover a bedsit. It means people will be pushed out of their homes into living with strangers, while they are very financially vulnerable. Any issues with shared bills or theft (eg of food) would be huge problems on such a tight budget.

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