09 June 2023 , 13:00
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The current level of local housing allowance (LHA) rates is not enough to cover rising private rental costs analysis has revealed.
Local housing allowance rates, which set the maximum amount tenants receive through Universal Credit or Housing Benefits, have been frozen since 2020 - based on 2018-19 rents.
The money is supposed to cover the lowest 30% of market rents however new analysis by the Chartered Institute of Housing (CIH) and charity Shelter reveals that this is not the case for a typical two-bedroom home.
According to the analysis of rental rate data from the Valuation Office Agency between October 2021 to September 2022. fewer than one in five private rents in England were viable within local housing allowance rates.
The average renter was also found to have a £151 a month shortfall - this number will also be likely even higher now and rents across the UK have reached record highs over the last year.
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As rents continue to rise, Shelter and CIH say the 1.8million private renters in England who receive benefits will face a steeper challenge finding a place to live.
While the allowance does not keep up with rents across England overall - some areas have a larger shortage of property than others.
In particular, the analysis found that properties in the south east of England had fewer than 10% of properties which are affordable on local housing allowance.
In Yeovil in the south west, just 7% of properties would be covered by housing benefit.
In Tameside, Greater Manchester, just 5% of properties are suitable for low-income renters.
The analysis revealed a bleaker outlook for single people claiming the cost of a room in a flat/house share.
Around 5% or less of rooms to rent were affordable in 24 out of 152 local areas in England.
However, in coastal areas such as North Cornwall, North Devon, Plymouth and Dover there were no affordable rooms at the shared accommodation rate at all.
Charlie Berry, policy officer at Shelter, said: “These huge shortfalls leave private renters at high risk of going into rent arrears and push families towards homelessness.
"With fewer and fewer affordable private rentals for people on housing benefit and a severe shortage of social housing, we are sadly left with a homelessness crisis; there are now more than 101,000 homeless households living in temporary accommodation, the highest number for almost 20 years.
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“The evidence is clear: the Government must end the damaging freeze to local housing allowance which is leaving low-income families with nowhere they can afford to call home.”
A Government spokesperson said: “We recognise the pressures of rising rents which is why we have maintained 2020’s £1 billion boost to Local Housing Allowance rates which provided more than a million claimants with an extra £600 a year on average.
“We are projected to spend over £30billion on housing support in 2023-24 on top of a significant package of support to help with rising costs, worth an average of £3,300 per household.
“For those who face a shortfall in meeting their housing costs, Discretionary Housing Payments are available from local authorities.”