New ONS stats on the cost of renting paint a grim picture for low income private tenants.
Rents in England have increased by 2.5% over the last year, much higher than inflation. As you’d expect the rise in London was even higher at 3.8%. To give you a sense of how this compares, in the previous year (June 2013-June 2014) rents in England went up by 1.5% and 2.1% in London.
The increase in housing costs is a real concern for everyone. Research by Joseph Rowntree Foundation last week showed that private tenants are already facing the financial strain. In the UK private tenants, out of all tenures, pay the highest proportion of their household income on housing – compared to other tenants in the European Union.
However, for private tenants supported by Local Housing Allowance (housing benefit for private tenants), these increases make the threat of eviction and homelessness much more likely.
The research shows that income poor households spend more than half (53%) of their income on rent. This is significantly higher that the European average of around 39%.
The chilling effects of high rents for low income households are already being felt. The loss of a privately rented home is the leading cause of homelessness across in England. In London, where the market is particularly overheated and rents are rising most steeply, the proportion of people made homeless from the private rented sector is much higher.
Worryingly, this situation looks set to get much worse.
A couple of weeks ago the government announced that Local Housing Allowance, along with most other working age benefits, will be frozen for the next four years. This means the amount people receive won’t go up from year to year to keep pace with the increase in the cost of housing. The freeze will clearly be felt much more deeply in parts of the country where rents are rising steeply. The gap between the actual cost of rent and Local Housing Allowance has already widened significantly over the course of the last four years, as the rate failed to keep pace with increases in market rents.
You can find more detail on the expected freeze and other Budget announcements in our previous blog, but the impact of what today’s stats tell us is clear. Freezing local housing allowance rates when rents are rising so steeply will undoubtedly lead to more and more private tenants facing homelessness.