Low cost rentals are still out of reach for people on low incomes

The cheapest private rental homes are still out of reach for people on low incomes according to new research.

The report from the Chartered Institute of Housing (CIH) found that more than 90 per cent of Local Housing Allowance (LHA), the housing benefit for private renters, fails to cover the cheapest rents.

LHA rates were frozen for four years in 2016 and the CIH is now calling on the government to review the policy and end the freeze immediately, with rates falling so far behind that even the cheapest rents are now unaffordable for most low income tenants, putting them at risk of homelessness.

Mind the #LHAgap: people on low incomes are facing big gaps between their housing benefit and private rents, according to our new research https://t.co/ZrkiVcVGDFpic.twitter.com/rhPxaqM7Ai

— Chartered Institute of Housing (@CIHhousing) August 29, 2018

The rates were designed to cover the cheapest 30 per cent of homes in any given area, but haven’t been increased in line with local rents since April 2013, and will remain frozen until April 2020.

The report found that as a result of the freeze renters are facing rent gaps ranging from £25 a month on a single room in a share home outside London to more than £260 a month on one to four-bedroom homes in some areas of London.

CIH raised concerns that – with the gap increasing to £300 and £3,120 over 12 months – renters will be forced to choose between heating and eating.

The report found the impact of the funding has been “negligible” and covers “only a handful of the shortfalls completely” with single renters under 25 hit particularly hard due to LHA only covering rent on a bedroom in a shared home.

CIH chief executive Terrie Alafat CBE said: “Our research makes it clear just how far housing benefit for private renters has failed to keep pace with even the cheapest private rents.”

Matt Downie, director of policy and external affairs at Crisis, said the report highlighted “just how much housing benefits for private renters are falling short of the levels needed.”

He said 236,000 people across Britain faced homelessness because they “simply can’t find a home because there isn’t enough social housing and housing benefits are too low to cover private rents.”

A government spokesperson said: “We spend £24bn a year on housing benefit each year. And since April we’ve provided additional, targeted housing support for low-income households by increasing more than 200 local housing allowance rates.

“Since 2011, we have provided a further £1bn in discretionary housing payment for local authorities to support vulnerable claimants with their housing costs.

“We have also delivered over 378,000 new affordable properties since 2010 and we are investing a further £9bn in affordable homes to buy and rent.”