The report is part of an ongoing piece of ‘independent’ research commissioned by the DWP to look at the impact of the first raft of welfare reforms – the vicious cuts to housing benefits. These included the caps on the amount of benefit available to pay for housing and a reduction in local housing allowance rates from the bottom 50% to 30% of the local rental market. Another change meant that those aged under 35 are no longer entitled to a self-contained property, but can only claim the Shared Accommodation Rate (SAR).
The research features wide ranging interviews with claimants, landlords and housing advisors discussing the changes. As is repeatedly pointed out, as these interviews were carried out throughout 2012, then many, if not most claimants will not have yet been affected by the reforms. This research is therefore an indicator of how people are intending to respond to the changes. The report is also quite long so I won’t try cover it all in one post.
Predictably the most telling comments come from landlords. According to the report, 16% of landlords who currently let to claimants plan to stop doing so due to the cuts. Most landlords seem well aware of what is to come and are already making plans:
“I’m giving notice on [20 tenants affected by the change to the Shared Accommodation Rate], it’s not fair, I don’t like doing it. And we’re not taking any [more] on. We have to protect ourselves and we have to protect our landlords.”
This was the response of one letting agent to the vicious slashing of housing benefits for those under 35 and is an attitude which seems to dominate the private rental sector. Despite initial claims by the Government that landlords would lower rents in response to the changes it seems that barely any of them have been prepared to do so. Only those renting in areas with high numbers of claimants have seriously considered this as an option – but crucially even this in many cases appears to be just a temporary measure. Landlords may be willing to accept a temporary small reduction in rent to avoid the expense of eviction, but will turf tenants out when tenancies are due for renewal.
Local Housing Allowance (LHA) is a localised benefit, which is paid according to the local cost of rents. This decision to peg the maximum available at the bottom 30%, rather than 50% of the market, will mean hundreds of thousands of private sector tenants forced to pay some of their rent out of meagre benefits intended to pay for other living expenses.
The average loss to claimants according to the report is £7.76 a week – although due to the caps in some areas this will be far higher. Landlords appear to be sceptical that those on benefits will be able to afford this, with one warning: “Some of them are making it up but a lot of them are struggling because it’s not just [LHA] that’s been cut, they’re getting other money cut as well, so it’s making it harder and harder.”
Many landlords report having already reduced the number of claimants they rent to on Local Housing Allowance due to the introduction of Direct Payments by the Labour Government in 2008. This meant that generally rent payments were sent direct to tenants not landlords, a move which was hugely unpopular amongst those renting out property. When Universal Credit is finally launched, the Direct Payments regime will be strengthened and also applied to the social housing sector. The very thing that most landlords say puts them off renting to claimants is about to be hugely extended.
As would be expected, one of the biggest impacts of the reforms has been in London where in some boroughs almost no properties are now affordable to those on benefits due to the caps. This will not just affect those out of work – 44% of housing benefit claimants in London are working. It will also not just impact on central London boroughs such as Westminster where rents are astronomical. A letting agent in Barking and Dagenham reports their current strategy on renting to tenants on benefits: “We have slowly, slowly been booting them out, average between 150 and 200 properties.”
The research also reveals that a less well known, but sweeping reform to housing benefits, the introduction of the Shared Accommodation Rate for those under 35, could bring some of the most devastating consequences. This change, which means anyone under 35 will have to find a room in a shared house to be eligible for LHA, was carried out without any assessment of whether enough properties exist to house all those who need them.
The report suggests that this is not the case, with many landlords pulling out of the multiple occupancy market due to recently introduced regulations. Planning permission is now needed if a property is to be used for multiple tenants in a move which many landlords claim has made the sector unprofitable. Quite simply, most landlords say the Shared Accommodation rate is too low, summed up by this quote from a landlord in Perth: “‘Where’s the difference going to come from £52 [LHA] up to £85 a week [rent]? There’s no way somebody on £120 a fortnight can afford to pay the difference and I can’t rent them out at £53 a week. I think they’ll possibly be moving, I can’t see any alternative.”
Almost all landlords quoted say they are planning to evict claimants under 35, with some going even further and suggesting they will now not rent to anyone from this age group: “We’re not housing under 35s now, so long term it will resolve itself because we’re not putting anyone in under 35. But we’ve got this 15, 20 people who are going to be on the street.”
This comment is backed up by a housing advice worker later in the report who says: “a lot of existing agents and landlords have told me they’ve now served notice on every tenant they have under 35. Even those tenants who might be in work at the moment, a lot of landlords have thought if they lose their job they won’t be able to pay the rent.”
Many landlords fear that tenants under 35 will face homelessness as a result of the drastic cuts: “[They’ll end up] on the streets, they’ve got nowhere to go. These people haven’t got no funds.”
Others have concerns that separated parents will no longer be able to have their children stay with one Hackney landlord saying: “There are going to be certain tenants who it’s going to have a massive impact on. My heart bleeds for them, because the majority of them are divorced fathers who see their kids. I’ve got one lovely guy, he’s got three kids, wife lives in Hillingdon, kids come and spend the weekend with him, where’s he going to put them? Does he lose his visitation rights to his children because he hasn’t got a job or hasn’t got the home to be able to offer the children somewhere to sleep [because] there isn’t any room?”
Like many of the bodged welfare reforms, it will be the most marginalised who are worst affected by the slashing of LHA rates for under 35s. Those likely to end up homeless will be the people who cannot go back to live with their parents, or who face other difficulties such as a mental or physical health condition which makes sharing difficult or even impossible.
Whilst claimants in some form of supported accommodation, such as homeless nightshelters or women’s refuges have been exempt from the reforms (so far), many Local Authorities used informal relationships with landlords to provide housing for those they deem ‘vulnerable’. The report suggests this is all likely to come to an end, with one landlord reporting: “‘I’m kicking them all out … I’m serving them notices because I want, on the day the rent will have to be changed, they’ll already be out … It’s a complete change to the portfolio. I’ve always been the person they phone up and say they’ve got somebody who’s not well or who’s just come out of drug rehabilitation, that kind. I’ve always taken them in and never had a problem but I’m not going to do it any more.”
To read the DWP’s gushing press release which accompanied this report you would never guess the bleak future it describes for low income tenants. This is far from surprising. Minister for Welfare Reform, Lord Fraud claimed the first piece of research in this series proved tenants were not facing excessive financial difficulties due to housing benefit reforms. In fact the research had revealed that many tenants were having serious money problem before the cuts were even introduced.
This time the DWP is attempting to use the research to claim that there has been no Kosovo style social cleansing due to LHA reforms and people are not being exported from London in huge numbers. But that’s because the report was carried before most claimants had been affected by the changes. The views of claimants themselves, along with housing advice workers, (both of which I’ll cover later this week) reveals that this mass forced expulsion is simply yet to come.
It’s also important to note this research does not include the impact of the Bedroom Tax, the overall benefit cap or Council Tax benefit reform. Nor does it consider the changes to DLA, Employment Support Allowance, the upcoming nightmare that is Universal Credit or the huge rise in the numbers of claimants having benefit’s sanctioned. It also does not examine the consequences of the Benefit Uprating Bill which will see Local Housing Allowance rises capped at 1% annually despite rents soaring by over ten times that figure in some parts of the UK.
If this report makes grim reading (and it does) for all those concerned about the future of housing for people on low incomes, then it is only a small taste of what is to come.
The report can be read at: http://research.dwp.gov.uk/asd/asd5/report_abstracts/rr_abstracts/rra_838.asp
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