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.

rentaflat.co.uk

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.