A homelessness and debt crisis is looming because housing benefits don’t cover the full cost of rent for more than half a million renters in England, according to campaign group Generation Rent.
Research carried out by the group has found that two in five private renters in England – around 1.9m households – now rely on universal credit or housing benefit to pay their rent. However, for 538,000 it is not enough to cover their rent.
Generation Rent warned this is a growing issue as the number of private renters claiming benefits rose by 36% – or 507,000 households – between February and August this year.
The group, which campaigns on behalf of renters, had called for Westminster to increase benefits available to private renters in the recent Spending Review. But instead local housing allowance (LHA) will be frozen for the next year.
Generation Rent director Alicia Kennedy described the Spending Review as a “missed opportunity” to protect renters who have lost income due to the pandemic against debt, hardship and homelessness.
She added: “Rishi Sunak predicted... that unemployment would rise to 2.6 million, but did nothing to make the welfare system fairer for people who are relying on it. Already, 2 million private renters are claiming for universal credit, but with LHA not covering the cost of rent, debt is piling up.
“The announcement of extra funding for rough sleeping is welcome, but does not deal with the root of the problem – renters on universal credit in an average property don't get enough to pay the rent, and the government's announcement of an LHA freeze will make this worse.
“Our broken benefits system has left renters footing the bill for coronavirus. To support renters who have lost income due to the economic shock of COVID-19, the government must increase LHA to the median rent, scrap the benefit cap, and make grants available for those who have built up unmanageable debt during the first wave."
LHA is set at the rate of the cheapest 30% of homes in a local area. GR said the increase in universal credit applications was highest in areas where there was the greatest gap between local housing allowance and average rents.
* CIEH has broadly welcomed the spending review for Westminster’s commitment to the green agenda but raised concerns about the public pay freeze. Meanwhile, the Royal Society for Public Health welcomed additional funding for front line services but also described it as a “missed opportunity” to adequately fund local public health and that the government has failed to understand that cuts to local public health are a false economy.