Cover the Cost: How gaps in are impacting homelessness

May 2019 About us Contents

Crisis is the national charity for homeless people. Foreword 4 We are committed to ending homelessness. Executive Summary 6

​Every day we see the devastating impact homelessness has on people’s lives. Introduction 10 Every year we work side by side with thousands of homeless people, to help them rebuild their lives and leave homelessness behind for good. Policy Context 12 Changes in the availability of affordable housing 12 Through our pioneering research into the causes and consequences of homelessness and the solutions to it, we know what it will take to end it. The use of the private rented sector 13

Together with others who share our resolve, we bring our knowledge, Changes to financial support to pay rent in the private rental market 14 experience and determination to campaign for the changes that will solve the homelessness crisis once and for all. must be a tool to prevent homelessness 18 Local Housing Allowance rates should help stabilise people’s We bring together a unique volunteer effort each Christmas, to bring warmth, housing and prevent homelessness 19 companionship and vital services to people at one of the hardest times of the year, and offer a starting point out of homelessness. Increasing the number of private landlords willing to let to tenants receiving Universal Credit 29 We know that homelessness is not inevitable. We know that together we can end it. Providing councils with the tools to better prevent homelessness 32

Ensuring that Universal Credit rapidly responds to homelessness 36 Enabling councils to rapidly respond to homelessness by opening up the private rental market and increasing landlord confidence in Universal Credit 39 Acknowledgments Additional pressures on tenants that interact with Local Housing Allowance rates 43

Conclusion 44

With special thanks to Crisis clients for sharing their stories and experiences, Appendix A 46 and colleagues at Crisis for their help in developing this report, in particular Maeve McGoldrick, Hannah Gousy, Francesca Albanese, Sorana Vieru, Beth Reid, Nick Morris, and Ruth Jacob. Thanks also goes to Solace Women’s Aid and their client for sharing their story.

A special thanks also goes to Sam Lister at the Chartered Institute of Housing and Tom Wagstaff for the joint research to inform this report. 4 5 Foreword

Homelessness is not inevitable. We know that in most cases the cost of renting, should be a top it is preventable, and in every case, it can be ended. Countries priority for the government and cities around the world have worked successfully to reduce in the upcoming Spending Review. and end all forms of homelessness. This is possible in Great In doing so, significant progress will be made towards the Westminster Britain too. Government’s commitment to end rough sleeping by 2027. It will Crisis research shows that unless tenancy has been the leading cause help to prevent many thousands of there is a significant shift in current of homelessness in England for the people from losing their homes and government policy, homelessness will past eight years. experiencing homelessness, the most more than double across Great Britain acute form of poverty in Britain. by 2041. The opportunity and time With the current freeze on Local for change is now. Housing Allowance rates coming to an end in 2020, the Westminster Last year, Crisis published our plan to Government has a unique opportunity end homelessness, Everybody In: How to restore these rates in line with the to end homelessness in Great Britain, real cost of renting. This will have setting out the policy changes needed an immediate impact. It will provide to achieve this. We used evidence the housing security that families and research from both home and and people at risk of homelessness abroad, and the voices of people who are living on the lowest incomes Jon Sparkes with experience of homelessness, to urgently need. Restoring rates to a Chief Executive, Crisis understand how to end homelessness level where they cover the cost of for good. The report found that a renting will enable Universal Credit robust safety net that prevents to be a much more effective tool for and rapidly responds to homelessness preventing people’s homelessness. It is key to achieving this ambition. will also increase the success of the Homelessness Reduction Act (2017) The introduction of Universal Credit in England, which places a much presents a significant opportunity to stronger emphasis on stabilising ensure the welfare system operates housing and preventing homelessness to effectively prevent and respond from occurring in the first place. rapidly to homelessness. Critical to this is ensuring that people on low Investing sufficiently in Local Housing incomes can access the financial Allowance rates, so they cover the support they need to secure their cost of rent, has the support of a privately rented home and prevent wide range of organisations working homelessness from occurring in the in housing and homelessness. first place. Our research shows that The Local Government Association, continued underinvestment in Local London Councils, the Residential Housing Allowance rates is putting Landlords Association, Shelter and more people at risk of homelessness the Chartered Institute of Housing, and hampering the ability of councils amongst others, support this call for and Jobcentres to end homelessness investment. Investing in Universal for good. The end of a privately rented Credit in this way, so that it covers 6 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Executive Summary 7 Executive Summary

Ending homelessness in all its forms welfare safety net must therefore must be a top policy priority for be designed to be responsive to government. Since 2010, rough homelessness and housing insecurity, sleeping in England has increased by so that people on low incomes can 165 per cent despite a small drop of afford and stabilise their housing. two per cent in the last 12 months.1 In , statutory homelessness The most economically viable way to accommodation.7 These are short people to stabilise their homes and increased from April 2017 to March provide enough affordable housing is tenancies, usually six to 12 months, prevent homelessness when needed. 2018,2 and there is evidence of people to considerably expand the supply of and after this period tenants can Continued underinvestment in having to stay for longer in unsuitable social housing.6 However, until social be evicted even if they have fulfilled these rates is a factor in explaining temporary accommodation.3 In housing can meet demand, people the agreements in their contract. homelessness from the private , official data shows there on low incomes must be able to find In Wales, the ending of an Assured rented sector.11 were 2,142 households in temporary secure and stable housing in the Shorthold Tenancy is also a growing accommodation in June 2018 – the private rented sector. cause of homelessness.8 The recent A series of changes to these rates since highest number to date.4 welcome announcement9 to end 2011 has meant support was reduced Yet the private rented sector is section 21 evictions10 in England and from covering 50 per cent of local To reverse these trends, and ultimately increasingly becoming an unviable Wales is a significant step to help the rents to just under the cheapest third end homelessness, there must be option for resolving homelessness. private rented sector prevent and of local rents (30 per cent of rents). a focus on tackling its root causes. In England, the lead cause of resolve homelessness. This support was then further eroded Research and evidence show that the homelessness is the ending of an to cover an even smaller percentage of supply and availability of affordable Assured Shorthold Tenancy in the Local Housing Allowance rates local market rents, finally culminating homes for people on low incomes is private rental market, as tenants determine the maximum amount in an overall freeze from 2016 to essential to achieving this.5 A robust struggle to maintain or secure of financial support people on 2020. As a result, in many parts of low incomes receive to assist with the country, Universal Credit is failing 1 The government’s rough sleeping count is based on estimates and counts of the number rough paying rent. They are now part of to support people to afford even the sleepers in England, carried out by councils between 1 October and 30 November 2018. The 2018 figures are Universal Credit and should help cheapest rents. a decrease of two per cent since 2017, and a 94 per cent increase from five years ago and 165 per cent since 2010 https://www.gov.uk/government/statistics/rough-sleeping-in-england-autumn-2018 2 National Statistics, Homelessness in Scotland 17 – 18 https://www.gov.scot/publications/homelessness- 7 National statistics on homelessness in England https://www.gov.uk/government/statistics/rough- scotland-2017-18/pages/8/ sleeping-in-england-autumn-2018 3 Sanders, B. with Reid, B. (2018) I won’t last long in here: Experiences of unsuitable temporary 8 , Homelessness statistics https://gov.wales/statistics-and-research/ accommodation in Scotland. London: Crisis. homelessness/?lang=en 4 Welsh Government, Homelessness statistics https://gov.wales/statistics-and-research/ 9 The Guardian (2019) ‘Short-notice evictions face axe in tenant rights victory’ https://www.theguardian. homelessness/?lang=en com/society/2019/apr/15/short-notice-evictions-face-axe-in-tenant-rights-victory 5 Downie, M., Gousy, H., Basran, J., Jacob, R., Rowe, S., Hancock, C., Albanese, F., Pritchard, R., 10 A section 21 eviction enables landlords to evict tenants without reason from an assured shorthold Nightingale, K., and Davies, T. (2018) Everybody In: How to end homelessness in Great Britain. London: Crisis. tenancy once the tenancy period has expired. 6 Capital Economics (2018) Saving through Social Rents: An assessment of the implications of building 11 National Audit Office (2017) Report by the Comptroller and Auditor General: Homelessness. London: 100,000 social rent homes annually between 1997 and 2017. London: Capital Economics National Audit Office 8 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Executive Summary 9

Research carried out by Crisis and the to prevent people from becoming Chartered Institute of Housing in 2018 homeless from the private rented has shown that underinvestment in sector, or to rehouse people in a Local Housing Allowance rates mean privately rented home. This results in that 92 per cent of areas in Great increased expenditure on temporary Britain were unaffordable to single accommodation. Government data people or a couple or a small family for England shows that homelessness in 2018/19.12 By nation, 97 per cent acceptances by local authorities in of areas in England, 82 per cent in England have increased by 41 per cent Wales, and 67 per cent in Scotland (64 per cent in London) since April were unaffordable within 2018/19 2011, when Local Housing Allowance Local Housing Allowance rates. rates were first reduced.13 This has also led to a dramatic increase in The diminishing financial support for the number of households living in private renters on low incomes has temporary accommodation; up by 99 meant there are often large shortfalls per cent across England since April between Local Housing Allowance 2011.14 rates and people’s rents. These shortfalls exist in many parts of the Investing in Local Housing Allowance country, and often mean people are rates will provide a dramatic life line forced to find ways to cut back on to struggling families and people essentials, or get into debt or rent on a low income. Levels of debt arrears, in order to pay their rent. and rent arrears for people needing This significantly increases the risk support from Universal Credit will of homelessness for many individuals reduce and, crucially, homelessness and families. will be successfully prevented or relieved by councils and Jobcentres Underinvestment in Local Housing for significantly more people under Allowance rates also means that Universal Credit. people who are already homeless have very limited housing options, The upcoming 2019 Spending Review placing them at risk of a prolonged or presents a significant opportunity for repeat experience of homelessness. government to end different forms of This in turn places increased pressure homelessness by investing in Universal on councils across Britain. Without Credit housing support (Local Housing sufficient social housing in many Allowance). This would ensure that, parts of the country, councils rely when needed, the welfare system on the private rented sector to fulfil is an effective tool for preventing their statutory duties to prevent and homelessness. Local Housing relieve homelessness; to stabilise Allowance rates are an important part someone’s housing if they are at of housing and welfare policy and risk of homelessness and either ought to be properly resourced so that, to provide help with rehousing, or when needed, they sufficiently cover accommodation where required. the costs of renting and successfully secure people’s homes. However, in many places, due to reduced expenditure on Local Housing Allowance rates, councils struggle

12 Unaffordable is defined as 20 per cent or less of the private rented sector being affordable within Local Housing Allowance rates. 13 Ministry for Housing Communities and Local Government (2019) ‘Acceptances and decisions live tables: January to March 2018 (revised)’. London: MHCLG. 14 Ministry for Housing Communities and Local Government (2019) ‘Temporary accommodation live tables: January to March 2018 (revised)’. London: MHCLG 10 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Introduction 11

2015 onwards would have an even This report will focus on how the larger impact – reducing the expected welfare system, principally Universal increase by 47 per cent.20 Credit, can be an effective tool to prevent and rapidly respond to Simply put, housing and welfare homelessness through providing Introduction policies have a significant impact sufficient support to cover the cost on levels of homelessness in Great of renting to stabilise housing. Britain. Securing a stable home As welfare policy is still largely the provides people the best chance responsibility of the Westminster of moving on from homelessness Government, this report will highlight or preventing it altogether, so they the policy change and investment There are more than 170,000 families Scottish Local Authorities (COSLA) can focus on aspirations such as needed by the Department for and individuals across Great Britain have gone further and have committed progressing in, or getting into, work. Work and Pensions and HM Treasury experiencing the worst forms of to ending homelessness and published to ensure the financial support to homelessness.15 This includes people a high-level action plan to achieve this, A National Audit Office report found pay rent provided under Universal sleeping rough, in cars, tents, and based on the recommendations of the that cuts to the support people receive Credit is a truly effective tool for public transport, or staying for Homelessness and Rough Sleeping from the welfare system to cover rent preventing homelessness. extended periods of time in unsuitable Action Group (HARSAG).18 The Welsh in the private rented sector, have likely temporary accommodation. Government has committed to ending contributed to levels of homelessness youth homelessness by 2027, and has in England.21 The leading cause of Crisis research shows that if there set up a Ministerial Taskforce to take homelessness in England for the last is no significant change to current this work forward.19 eight years has been the ending of homelessness, housing and welfare an Assured Shorthold Tenancy in the policy this number will more than To deliver on these commitments private rented sector.22 These are short double to 392,000 by 2041.16 But and ensure the success of the tenancies, usually six to 12 months, homelessness is not inevitable. With Homelessness Reduction Act (2017) and after this period tenants can be the right policies in place, we can in England, it is essential that the evicted even if they have fulfilled the reverse this trend and ultimately end Westminster Government takes steps agreements in their contract. homelessness in Great Britain altogether. to address wider issues that hamper efforts to prevent homelessness, Government data shows that The Westminster Government including the supply and availability homelessness acceptances by councils has already taken important steps of affordable housing. in England due to the ending of towards tackling homelessness. The an Assured Shorthold Tenancy has introduction of the Homelessness Crisis modelling on the future trends increased by 66 per cent (and have Reduction Act (2017) in England has of the worst forms of homelessness more than doubled in London) since placed a sharper focus on prevention has found that availability and 2011/12. This trend has coincided with activity. In August last year, the affordability of housing are key drivers reductions in financial support from Homelessness and Rough Sleeping of homelessness. The modelling found the welfare system for low income Implementation Taskforce published that increasing the supply of affordable private renters.23 The ending of an the Rough Sleeping Strategy 2018 housing (including social housing) Assured Shorthold Tenancy is also a setting out its plan to halve rough would reduce the expected increase growing cause of homelessness in sleeping in England by 2022 and end in homelessness in 2041 by 35 per Wales for people assessed by their it altogether by 2027.17 The Scottish cent. Reversing cuts to financial local council.24 Government and Convention of support in the welfare system from

15 Albanese, F. (2018) Crisis blog: ‘What is the scale of homelessness on any given night?’ https://www. crisis.org.uk/about-us/the-crisis-blog/what-is-the-scale-of-homelessness-on-any-given-night/ 20 Bramley, G. (2017) Homelessness Projections: Core homelessness in Great Britain summary report. 16 Bramley, G. (2017) Homelessness Projections: Core homelessness in Great Britain summary report. London: Crisis. London: Crisis. 21 National Audit Office (2017) Report by the Comptroller and Auditor General: Homelessness. London: 17 Ministry of Housing, Communities and Local Government Rough Sleeping Strategy 2018: https://assets. National Audit Office publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/733421/Rough- 22 Ministry of Housing, Communities and Local Government (2018) ‘Live tables on homelessness: Initial Sleeping-Strategy_WEB.pdf decision tables’ https://www.gov.uk/government/statistical-data-sets/live-tables-on-homelessness 18 Scottish Government (2018) ‘Ending homelessness and rough sleeping: action plan’. https://www.gov. 23 Ministry for Housing Communities and Local Government (2019) ‘Acceptances and decisions live tables: scot/publications/ending-homelessness-together-high-level-action-plan/ January to March 2018 (revised)’. London: Ministry for Housing Communities and Local Government 19 Welsh Government Press Release ‘New projects to prevent youth homelessness announced by First 24 Welsh Government (2018) Post-implementation evaluation of Part 2 of the Housing Act (Wales) 2014: Minister’ https://gov.wales/new-projects-prevent-youth-homelessness-announced-first-minister Final Report. Cardiff: Welsh Government. 12 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Policy context 13

The overall effect of these changes has Housing policy is also the responsibility meant that the social housing sector in of the Welsh Government, which has many parts of England is no longer able committed to deliver 20,000 new to provide a long-term housing safety affordable homes between 2016 and net for low income households. Rather 2021, of which 2,600 homes a year it acts as what has been termed an will be assigned for social rent. This ‘ambulance service’ – helping those in doubles the Welsh Government’s Policy most acute need for shorter periods of previous target.34 The government has time.31 Crisis and the National Housing also abolished Right to Buy. However, Federation jointly commissioned Heriot the pace of delivery of social rented Watt to conduct an analysis of the scale homes is still raising questions as to of house building required to address whether supply can meet the level of the undersupply and end homelessness. need.35 The Welsh Government is due context The research found that over the next to report on their review of affordable 15 years, around 90,000 homes at social housing imminently.36 rent are needed per year in England. This level of housebuilding could significantly The use of the private reduce the worst forms of homelessness rented sector Changes in the availability In England, limited investment into by the mid-2020s.32 of affordable housing new homes for ‘social rent’27 has been The undersupply of affordable homes, a key driver of the reduction in supply. Housing policy has been devolved particularly at social rent levels, has Across Great Britain, there is a lack This has been further exacerbated by to Scotland since 1998. The Scottish meant that people on low incomes of decent, affordable homes for the conversion of some social rent Government has taken a number of are increasingly reliant on the private people on low incomes. While the homes to affordable rents. Affordable measures to ensure the availability of rented sector in all three nations. scale of the problem varies across rents in England are priced at 80 affordable homes for people on low Furthermore, councils now have England, Scotland and Wales due to per cent of market rents, which is incomes, including the abolition of the the power in England and Wales to differing housing policies and market often significantly higher than social Right to Buy policy and commitments to discharge their statutory homelessness conditions, the supply of affordable rents. In areas of high housing costs, increase the stock of affordable homes. duty by providing a suitable offer of housing falls short of current demand these rents remain out of reach for This has included committing to building private rented sector accommodation. in all three nations.25 people on low incomes who are often 35,000 social rented homes between reliant on financial support from the 2016 and 2021, which an independent Over the last decade in England, the Social housing has historically played government to cover the cost of rent. review found the Scottish Government private rented sector has doubled in a key role in providing stable and is on target to meet.33 As a result size to 4.5 million households.37 The secure homes for people on the Between 2012 and 2018, just over there is a greater supply of affordable same trend has been seen in Wales, lowest incomes, who would otherwise 111,000 housing units at social rents housing for people on low incomes, with the private rented sector doubling struggle to rent privately or become were converted into affordable rents.28 but there remain challenges with access from 2007 to 2017,38 prompting new homeowners. Yet the availability The stock of homes at social rents to affordable housing in areas where regulation in the Housing (Wales) Act of social housing for low-income has also been eroded by the Right to demand still outstrips supply. (2014).39 Similarly, in Scotland the families and individuals has been Buy policy,29 as there has not been declining significantly.26 sufficient replacement of homes sold 30 31 Stephens, M. Perry, J., Wilcox, S. Williams, P. & Young, G. (2018) 2018 UK Housing Review. Coventry: with new stock at social rent levels. Chartered Institute of Housing. 32 Bramley, G. (2018) Housing supply requirements across Great Britain for low income households and homeless people. London: Crisis and the National Housing Federation. 25 Downie, M., Gousy, H., Basran, J., Jacob, R., Rowe, S., Hancock, C., Albanese, F., Pritchard, R., Nightingale, K., and Davies, T. (2018) Everybody In: How to end homelessness in Great Britain. London: Crisis. 33 Young, G. and Donohoe. T. (2018) Review of Strategic Investment Plans for Affordable Housing. Edinburgh: SFHA/Equality & Human Rights Commission/Shelter Scotland. 26 Downie, M., Gousy, H., Basran, J., Jacob, R., Rowe, S., Hancock, C., Albanese, F., Pritchard, R., Nightingale, K., and Davies, T. (2018) Everybody In: How to end homelessness in Great Britain. London: Crisis. 34 Smith, B. (2018) Social housing in Wales. Cardiff: UK Collaborative Centre for Housing Evidence. 27 The term ‘social rent’ refers to social housing subject to guideline target rents originally set with 35 Downie, M., Gousy, H., Basran, J., Jacob, R., Rowe, S., Hancock, C., Albanese, F., Pritchard, R., reference to manual earnings as well as other factors. Nightingale, K., and Davies, T. (2018) Everybody In: How to end homelessness in Great Britain. London: Crisis. 28 Regulator of Social Housing (2018) Private registered provider social housing stock in England 2017-18. 36 Welsh Government (2018) ‘Review of affordable housing supply in Wales announced by Minister’ https:// Leeds: Regulator of Social Housing. gov.wales/review-affordable-housing-supply-wales-announced-minister 29 The Right to Buy scheme is a policy which gives secure tenants of councils and some housing 37 Ministry of Housing, Communities, and Local Government (2018) ‘English Housing Survey 2017 to 2018: associations the legal right to buy, at a discount, the council home they are living in. headline report’ https://www.gov.uk/government/statistics/english-housing-survey-2017-to-2018-headline-report 30 Chartered Institute of Housing (2018) ‘CIH calls on government to suspend right to buy as new figures 38 Fitzpatrick, S., Pawson, H., Bramley, G., Wilcox, S., Watts, B. and Wood, J. (2017) The Homelessness reveal less than a third of homes sold since 2012 have been replaced’ http://www.cih.org/news-article/ Monitor: Wales 2017. London: Crisis. display/vpathDCR/templatedata/cih/news-article/data/CIH_calls_on_government_to_suspend_right_to_ 39 Chartered Institute of Housing Cymru (2014) ‘Fact sheet: the private rented sector in Wales’. http://www. buy_as_new_figures_reveal_less_than_a_third_of_homes_sold_since_2012_have_been_replaced cih.org/resources/PDF/Wales%20Policy/prs_factsheet_english_language.pdf 14 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Policy context 15

private rented sector now houses 15 Paying rent is a non-negotiable Universal Credit. The rates were first This resulted in the rates becoming per cent of households compared to expense. When faced with an put in place in the UK in 2008. further detached from local private just five per cent in 1999.40 The Scottish unexpected increase in financial rents. In areas where private rents were Government has introduced a series of outgoings, low incomes households A series of national government rising, Local Housing Allowance rates reforms through the Private Housing have to make difficult decisions about policy changes to Local Housing were increasingly leaving people with (Tenancies) (Scotland) Act (2016), how to manage their money. This Allowance rates has eroded the level of a large gap between the financial including increased security of tenure means sometimes being forced to support people on low incomes receive support they received and their and a framework for rent regulation.41 borrow from expensive lenders or cut to help cover the cost of their rent. monthly rent. In 2015, the Shared Given that current need and demand is back on essential spending for food The rates were originally calculated Accommodation Rate was extended outstripping supply across all tenures, and other basics to reduce outgoings. to cover local rents within an area48 at from under 25s to under 35s. In 2016, there is likely to be a continuing role for Failing to pay rent puts households at up to 50 per cent of the market, and a the Local Housing Allowance rates the private rented sector to bridge the significant risk of losing their home household size of up to five-bedrooms. were frozen completely for four years supply gap in Scotland.42 and becoming homeless. This included having a lower rate for until 2020. The cumulative effect people under 25, called the Shared of policy changes to Local Housing Growing reliance on the private rented When needed, the welfare system Accommodation Rate, which assumed Allowance rates since 2011 has sector across all three nations has provides people on low incomes with that most young people would live in a resulted in a significant erosion of the resulted in increased demand for a financial support for housing costs. shared property.49 support people can receive from the limited supply of properties in many Under Universal Credit, this support is government to help with the cost of areas. A higher proportion of working set at the same level as it was under In 2011, the rates were changed so their rent. age private renters spend more than the system through that they were calculated to cover a third of their income on housing, Local Housing Allowance rates. local rents up to 30 per cent (the To mitigate some of the impact of compared to people of working age Financial support for housing costs 30th percentile) of the market and a these changes on the ability of low- living in other housing tenures,43 and a provides a vital lifeline for around 1.1 household size of up to four-bedrooms. income renters to afford the private growing proportion of people on the million households renting privately.47 This meant that people receiving Local rented sector, the Westminster lowest incomes spend more than a Housing Allowance rates could afford Government put in place Targeted third of their income on housing.44 Changes to financial just under a third of the cheapest rents Affordability Funding to allocate support to pay rent in the in an area. At the same time, national additional funding to areas of high Despite people spending more on private rental market weekly caps were put in place so that housing costs in 2014. Targeted their rent, across all three nations in areas of very high housing costs, Affordability Funding is generated homes in the private rented sector Under Universal Credit, Local Housing such as London, the rates could not from the savings that have been made are also of poorer quality than other Allowance rates set the maximum go above a certain limit, even if this by the changes to Local Housing tenures.45 As poor conditions tend to amount of financial support someone resulted in less than 30 per cent of the Allowance rates since 2013. be concentrated at the lower-cost end can receive towards covering the market being covered by the rates. of the private rented sector, people cost of their rent in the private rented The funding is used to uplift Local on low incomes, including people sector, based on the size of the From 2013, the Local Housing Housing Allowance rates by around experiencing homelessness, are property. The rates have been carried Allowance rates were no longer three per cent. The overall amount of disproportionately impacted.46 over from the previous Housing calculated to cover up to 30 per cent of funding is limited and so it is allocated Benefit system and incorporated into local rents in an area but were instead to areas where housing costs are high. increased by the Consumer Price Index This is calculated by looking at which 40 Fitzpatrick, S., Pawson, H., Bramley, G., Watts, B., Wood, J., Stephens, M., and Blenkinsopp, J. (2019) The homelessness monitor: Scotland 2019. London: Crisis. (CPI). This index is a much poorer areas the Local Housing Allowance 41 Fitzpatrick, S., Pawson, H., Bramley, G., Watts, B., Wood, J., Stephens, M., and Blenkinsopp, J. (2019) indicator of changing rental prices, rates cover less than five per cent of The homelessness monitor: Scotland 2019. London: Crisis. meaning the Local Housing Allowance the private rented market.51 In recent 42 Trevillion, E. and Cookson, D. (2016) Demand patterns in the private rented sector in Scotland: time to rates were detached from local private years, the government has taken commit to residential investment? Edinburgh: Homes for Scotland. rents.50 In 2014 and 2015, the rates were welcome steps to increase the amount 43 Downie, M., Gousy, H., Basran, J., Jacob, R., Rowe, S., Hancock, C., Albanese, F., Pritchard, R., then only increased by one per cent. of Targeted Affordability Funding so it Nightingale, K., and Davies, T. (2018) Everybody In: How to end homelessness in Great Britain. London: Crisis 44 Joseph Rowntree Foundation (2017) ‘Housing costs’: https://www.jrf.org.uk/data/housing-costs 48 Local Housing Allowance rate are set by specific areas known as Broad Rental Market Areas (BRMA). 45 Ministry of Housing, Communities, and Local Government (2018) ‘English Housing Survey 2017 to 2018: How BRMAs are defined are set by the Westminster Government, and it must take into account reasonable headline report’ https://www.gov.uk/government/statistics/english-housing-survey-2017-to-2018-headline- access to facilities and health, education, personal banking and shopping services. It should also consider the report; Scottish Government (2017) Scottish Housing Conditions Survey Key Findings. Edinburgh: Scottish travel and public transport available in terms of accessing these services. There are 152 BRMAs in England, 22 Government; Welsh Government (2018) Welsh Housing Conditions Survey (headline results: April 2017 to in Wales, and 18 in Scotland. March 2018). Wales: Welsh Government 49 Housing Benefit: Shared Accommodation Rate Standard Note SN/SP/5889 https://researchbriefings. 46 Smith, M., Albanese, F., Truder, J. (2014) A roof over my head. The final report of the sustain project. files.parliament.uk/documents/SN05889/SN05889.pdf London: Crisis/Shelter Cymru (2016) Accessing and sustaining social tenancies. Swansea: Shelter Cymru. 50 Chartered Institute of Housing (2018) Missing the target: Is Targeted Affordability Funding doing its job? 47 Housing Benefit caseload statistics: https://www.gov.uk/government/statistics/housing-benefit- Coventry: Chartered Institute of Housing. caseload-statistics 51 Wilson, W., Barton, C. (2017) Local Housing Allowance caps and the social rented sector. London: House of Commons Library. 16 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Policy context 17

can be provided in more areas across and market rents, and so the impact the UK.52 depends on how much rents in an area have increased. However, research shows that despite investment from Targeted Affordability Analysis by Crisis and the Chartered Funding, underinvestment in Local Institute of Housing of the Local Housing Allowance rates continues Housing Allowance rates for shared, to negatively impact the ability of one-bedroom, and two-bedroom private renters to cover the cost of properties showed that in three- their rent and secure their home.53 quarters (74%) of the areas where This is because allocating the funding Targeted Affordability Funding was where the private rented sector is least allocated last year, only five per cent affordable means it tends to go to or less of the private rented sector areas where rents have been growing was priced within Local Housing fastest. As the funding only increases Allowance rates.54 Local Housing Allowance rates by a limited amount, it cannot entirely make up the gap between the rates

52 HM Treasury Budget 2018: https://assets.publishing.service.gov.uk/government/uploads/system/ uploads/attachment_data/file/752202/Budget_2018_red_web.pdf 53 Chartered Institute of Housing (2018) Missing the target: Is Targeted Affordability Funding doing its job? Coventry: Chartered Institute of Housing. 54 See Appendix A for full methodology. 18 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Universal Credit must be a key tool to prevent homelessness 19

The introduction of Universal Credit 2018/19 if they need to live in shared creates an opportunity to ensure that accommodation, a one-bedroom the welfare system operates effectively property, and a two-bedroom to prevent homelessness by providing property respectively.58 timely and sufficient financial support Universal for people to be able to pay rent and Looking at affordability within Local secure stable housing. Much of the Housing Allowance rates for 2018/19 focus on Universal Credit to date has reveals the challenge these households been on how the system functions, face when living in private rented Credit must including errors and delays. Under accommodation if they experience Universal Credit housing costs are no a drop in income, for example from longer received separately and so it will loss of employment, illness or caring be harder to understand the impact responsibilities. This would mean they be a key tool of underinvestment in Local Housing would require support from Universal Allowance rates. Credit to pay their rent while they are unable to work. However, the underinvestment in Local Housing Allowance rates is seriously The research found that across Great to prevent impeding the ability of Universal Credit Britain, 61 per cent of areas were to operate effectively to prevent and unaffordable59 within Local Housing respond to homelessness. There is an Allowance rates for 2018/19 to single urgent need to review Local Housing people, couples, and small families, homelessness Allowance levels to ensure they are not and 92 per cent were unaffordable to undermining the ability and ultimate at least one of these household types. success of Universal Credit to stabilise This is despite £40 million of Targeted people’s housing situation and prevent Affordability Funding in 2018/19. This homelessness. Urgent investment in reveals the extremely limited choices Local Housing Allowance rates will people receiving Universal Credit have The best way to tackle homelessness is This has significant cost implications ensure Universal Credit can stabilise in finding and keeping secure and to stop it happening in the first place. for homelessness services, physical housing and therefore operate stable housing in the private rented There is a significant human cost to and mental health services, and the effectively as a robust homelessness sector. homelessness. Repeat and entrenched criminal justice system.57 prevention tool. homelessness damages people’s When broken down by nation, physical and mental health, family People lose their homes when the Local Housing Allowance households in England face the relationships, employment prospects rising pressure from high rents and rates should help stabilise biggest challenge with 97 per cent and life chances. low incomes becomes too much. people’s housing and of areas unaffordable for at least one Without government support, a sudden prevent homelessness household type. This means that Research commissioned by Crisis found increase in pressure like losing a job or across most of England, households that the failure to deal with homelessness becoming ill can quickly force someone In 2018, Crisis and the Chartered are left with impossible decisions early is significantly impacting on the into homelessness. The welfare system Institute of Housing carried out about how to address the gap severity of people’s support needs.55 should be a robust safety net that joint research on the continued between the cost of their rent and the Fifty-six per cent of people who prevents homelessness from happening underinvestment in Local Housing amount of financial support available had faced five or more periods of in the first place and rapidly provides Allowance rates. The research to them from Universal Credit. homelessness also reported having five financial support for people if they do examined the impact on the ability of or more life experiences likely to result become homeless, so that they can people receiving Universal Credit to Figures 1.1 and 1.2 show the difficulties in a support need.56 This also makes quickly secure housing. afford somewhere to live in the private of finding affordable accommodation it harder for people to move on from rented sector up to April 2019. We within Local Housing Allowance rates homelessness when it does happen. looked at what single people, couples, for couples needing a one-bedroom and small families could afford within property and small families needing a 55 Mackie, P. and Thomas, I. (2014) Nations Apart? Experiences of single homeless people across Great Local Housing Allowance rates for two-bedroom property. Britain. London: Crisis. 56 Mackie, P. and Thomas, I. (2014) Nations Apart? Experiences of single homeless people across Great 58 Small families are defined as a couple with two children of school age, or a single parent with one child Britain. London: Crisis. of school age. Please see Appendix A for more details on the research methodology. 57 Pleace, N. and Culhane, D.P. (2016) Better than Cure? Testing the case for Enhancing Prevention of 59 Unaffordable is defined here as 20 per cent or less of the private rented market available within the Single Homelessness in England. London: Crisis. Local Housing Allowance rate. 20 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Universal Credit must be a key tool to prevent homelessness 21

Figure 1.1 Percentage of the private rented sector that couples needing Figure 1.2 Percentage of the private rented sector that small families a one-bedroom property can afford in England within Local Housing needing a two-bedroom property could afford in England within Local Allowance rates for 2018/19 Housing Allowance rates for 2018/19

Private rented sector aordability Private rented sector aordability in England in England

0 – 5% 0 – 5% 5 – 10% 5 – 10% 10 – 15% 10 – 15% 15 – 20% 15 – 20% 20 – 25% 20 – 25% 25% and above 25% and above

Source: Crisis and CIH analysis using data. Source: Crisis and CIH analysis using Valuation Office Agency data.

The maps show that stabilising per cent for couples needing a one- renters having no savings at all60 percentile of rents for small families housing in the private rented sector bedroom property. In Portsmouth, this leaves people facing impossible in different regions. is most challenging in the regions of couples could afford just eight per choices about whether to pay rent or London and the South East. In places cent of the market, and small families fall into rent arrears in order to pay These gaps have a significant impact like Hackney, Islington, and Tower could afford just seven per cent. for food and essential bills. An early on individuals and families’ ability to Hamlets, small families could find evaluation from the Department for retain their home. A small family living housing within the Local Housing However, the problem is not just Work and Pensions on the impact of in York and receiving Local Housing Allowance rate for a two-bedroom concentrated in London and the underinvestment into Local Housing Allowance faced a gap of £53.40 a property in just two per cent of the South East. As the maps show, in most Allowance rates found that tenants month to be able to afford rent in market. Couples needing a one- regions, the Local Housing Allowance were already being forced to cut back just under the cheapest third of the bedroom property don’t fare much rates fail to cover at least 20 per cent on household essentials or borrow market. With the average household better, with just four per cent of the of the private rented sector, and money from family and friends.61 in the Yorkshire region spending market affordable within the rates. in some places, particularly in and £52.90 a week on food62, this is more around larger cities, affordability is Table 1.1 provides a comparison than a week’s worth of food to make But even further out in the South as challenging as in London and the of some of the largest gaps up from other income to be able to East where housing is typically more South East. between Local Housing Allowance secure their housing. affordable, households face serious rates in 2018/19 and the 30th challenges to find housing within Local In many of these places, households Housing Allowances rates. In Hastings, have to cover significant shortfalls 60 Shelter (2017) General Election 2017: The case for living rent homes. London: Shelter England. 2018/19 Local Housing Allowance in their rent to be able to afford just 61 Department for Work and Pensions (2015) The impact of recent reforms to Local Housing Allowances: Summary of key findings. London: Department for Work and Pensions. rates only covered 13 per cent of the under the cheapest third of rents in 62 Office for National Statistics, Average family spend in the UK tables: https://www.ons.gov. market for small families needing a the private rented sector. With almost uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/bulletins/ two-bedroom property, and just seven two-thirds of low-income private familyspendingintheuk/financialyearending2018 22 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Universal Credit must be a key tool to prevent homelessness 23

Table 1.1 Low affordability areas with large shortfalls for small families in a What is the weekly gap between rents and 2018/19 Local Housing Allowance rates worth to two-bedroom property by region small families?

Region Low affordability areas Amount needed (Broad Rental Market Area) per week to afford Rugby and East (weekly gap Inner East for small families 30 per cent of the York (weekly gap £23.82): half a week’s worth of London (weekly market £13.35): one and a half food or two weeks of electricity gap £56.80): weeks of electricity one week of food North East Northumberland 17% £3.45 or five weeks of electricity Tyneside 18% £3.45 North West Southern Greater Manchester 7% £15.67 Central Greater Manchester 11% £16.95 Northampton Central London (weekly Yorkshire and the York 12% £13.35 (weekly gap £19.49): gap £213.60): three and Humber a half weeks of food or Harrogate 12% £12.66 two weeks of gas 19 weeks of electricity Northants Central 3% £17.46 Bristol (weekly gap £39.57): Cambridge (weekly gap three and a half weeks of Northampton 5% £19.49 £30.20): half a week of electricity or five weeks of gas food or three weeks of gas West Midlands Rugby and East 1% £23.82 Bath (weekly Warwickshire South 6% £17.74 Brighton and Hove gap: £34.14): half (weekly gap £30.74): East of England South West Herts 1% £38.77 a week of food or half a week of food or four weeks of gas Cambridge 2% £30.20 three weeks of gas London Central London 0% £213.60

Inner East London 2% £56.80 Source: Crisis analysis of Valuation Office Agency data and Office of National Statistics data of average weekly household expenditure data by region in 2018. Calculations rounded. South East Brighton and Hove 5% £30.74 Guildford 9% £30.19 The shortfalls households face each their Universal Credit claim because South West Bristol 1% £39.57 month between the cost of their there is an initial minimum five week Bath 7% £34.14 rent and the amount they receive to wait before people receive their first cover their rent via Universal Credit payment. People receiving Universal substantially increases the likelihood Credit can take out an advance from of them falling into rent arrears. the Department of Work and Pensions, These households are also likely to which is paid back each month. Last In some regions, the gap between this is still more than the amount face additional pressures on their year, the National Audit Office found rents at the 30th percentile and Local that households in the North East finances as they may be paying back that take up of advance payments Housing Allowance rates are typically on average spend per week on bills loans, debts, or money owed to the was at 60 per cent of claimants.64 lower. However, this still places for gas or electricity, which is £11.50. Department for Work and Pensions. Deductions for advances, or for other unsustainable financial pressures This can mean families with children Research by Shelter has found that one loans and debts, leave households with on low income households as they having to cut back on a week’s worth in six of private renters on the lowest even less money available to make up have to budget to make up the gap. of heating to be able to make rent 20 per cent of incomes are or have shortfalls in their rent.65 This leaves For example, in areas in the North payments. For households unable to been in rent arrears.63 people very vulnerable to rent arrears East like Newcastle and Gateshead, a work, this is also made more difficult and homelessness. small family receiving Local Housing as all working-age benefits have been Low income households are also Allowance would have to pay £13.80 a frozen since 2016. These choices more likely to be in debt at the start of month to afford rent in just under the put families and individuals at risk 63 Shelter (2017) General Election 2017: The case for living rent homes. London: Shelter England. cheapest third of the market. of homelessness as they struggle to 64 National Audit Office (2018) Report by the Comptroller and Auditor General: Rolling Out Universal manage due to inadequate financial Credit. London: National Audit Office. While this is significantly less than the support from Universal Credit to pay 65 Downie, M., Gousy, H., Basran, J., Jacob, R., Rowe, S., Hancock, C., Albanese, F., Pritchard, R., gap faced by families living in York, their rent. Nightingale, K., and Davies, T. (2018) Everybody In: How to end homelessness in Great Britain. London: Crisis 24 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Universal Credit must be a key tool to prevent homelessness 25

Figure 1.3 Percentage of the private rented sector that couples needing David*, 25, Croydon accepted something of bad quality like all a one-bedroom property can afford in Scotland within Local Housing “I was sofa surfing – staying with my mum those I had seen. But the flat I accepted on Allowance rates for 2018/19 and with friends. Before coming to Crisis, the ground floor had to be given to someone I tried to look for a place myself, I looked else, so they moved me upstairs and it’s on sites like Gumtree and a few others, a much better place – bigger and cleaner. but they never come back to you. They said I got lucky. they would phone back but they never do, Private rented sector aordability so I couldn’t find anywhere. I’m still paying about £30 to £40 a month in Scotland to cover my rent that isn’t covered by Local A lot of places I looked at was made Housing Allowance rates though. I make it impossible because of the Local Housing work but it is tight. You have to shop smart, 0 – 5% Allowance – it would mean I’d have to like with food. I can get a product of higher 5 – 10% pay too much money out of other money quality or get more of something with lower 10 – 15% available in Universal Credit. On top of that, quality. I have to freeze a lot of things! the places were awful… one of the first 15 – 20% places I looked at was in Peckham, it was tiny, It would be really hard if I got a big bill. 20 – 25% like a prison cell…it was really small. The first The electricity is a killer… I have the meter 25% and above few viewings were all like that, I thought it door open all the time so I can see the meter. was all I could get. They were all tiny with The first time I showered I saw it took £1 off! furniture in really bad condition. I never used to understand why when I was younger my mum would go around turning I’m relentless though… if you’ve got my off lights and shutting down my playstation… energy you’ll probably find somewhere but I but now I get it”. imagine people would get really disheartened. Even with me it got to the point where I was *This is a pseudonym to protect their identity. going to accept anything…to be honest I

Source: Crisis and CIH analysis using Rent Service Scotland data. In Scotland and Wales, the impact of In the Lothian area, a couple receiving underinvestment in Local Housing Universal Credit and living in a one- Allowance rates varies more widely bedroom property would have to than in England. However, it is still a budget for an extra £20.22 a week barrier to preventing homelessness. to be able to afford just under the This is significant as in Scotland over These households will need at least a Crisis’ joint research with the Chartered cheapest third of rents. In Greater the last decade there has been a shift two-bedroom property in the private Institute of Housing shows that in Glasgow, they would have to find an in the types of households now renting rented sector. This puts pressure on Scotland, 67 per cent of the private extra £11.50 a week. privately. Almost one-quarter of the private rental market as there is rented sector is unaffordable for at households in the private rented sector more demand for the same properties. least one household type considered Small families face an even greater have children. Lone parents are now As Local Housing Allowance rates are in the research. challenge as they are forced to budget almost as likely to live in the private falling so far short of providing the for much larger gaps. Table 1.2 shows rented sector as single adults (24 per support needed, this makes it less likely For both couples and small families, the proportion of the market that cent compared to 25 per cent) and are that small families needing support finding rents that are affordable within small families could afford within Local more likely than working age couples from Universal Credit will be able to 2018/19 Local Housing Allowance Housing Allowance rates for 2018/19 in without children (20 per cent) to live rent somewhere they can afford. rates was difficult in just under half the most expensive areas in Scotland, in the private rented sector. Couples of the country (eight of 18 areas). As and how much they would have to with one or two children are also now shown in figure 1.3, couples needing a find per week to be able to afford just more likely to live in the private rented one-bedroom property would struggle under the third cheapest rents. sector, up from three per cent in 1999 most to secure housing in Lothian and to 14 per cent now.66 Greater Glasgow. In these areas, just three and 13 per cent of the private rented sector is affordable within Local 66 Fitzpatrick, S., Pawson, H., Bramley, G., Watts, B., Wood, J., Stephens, M., and Blenkinsopp, J. (2019) Housing Allowance rates respectively. The homelessness monitor: Scotland 2019. London: Crisis. 26 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Universal Credit must be a key tool to prevent homelessness 27

Table 1.2 Low affordability areas in Scotland and the amount needed for small families to afford 30 per cent of the market

Low affordability areas Percentage of Amount (Broad Rental Market Areas) the local private needed per for small families rental market week to afford Mike*, 34, Crisis client my flat, or pay my rent. I went affordable within 30 per cent of “I used to have a private tenancy into rent arrears of £900 and I Local Housing the market Allowance rates of my own that I managed fine, didn’t know where to turn. but I went to prison and I lost it. Lothian 7% £28.57 I just didn’t realise how hard it I got advice from Crisis and East Dunbartonshire 8% £10.05 would be to find somewhere to my local council. I got a West Lothian 8% £14.64 live when I came out. Discretionary Housing Payment Greater Glasgow 9% £21.55 which was a huge help. If that When I came out of prison hadn’t happened I would have Perth and Kinross 12% £9.13 I wasn’t able to work, and eventually been homeless and Forth Valley 15% £5.76 eventually I was awarded I dread to think how I would Highlands and Islands 17% £4.35 Employment and Support have coped. Fife 18% £3.30 Allowance (ESA). I’m 34 and wanted to live in Sunderland, I had a Housing Coach at and so I was only entitled to Crisis and I get help with my In Wales, the impact of Allowance rates and face a gap of the Shard Accommodation Rate mental wellbeing. The support underinvestment in Local Housing £16.92 per week to afford just under of Local Housing Allowance of I received from Crisis has been Allowance rates has meant that 82 the cheapest third of rents. Similarly, £207 a month. phenomenal and without it I am per cent of the private rented sector just 16 per cent of rents in the Vale of not sure that I would still be here. was unaffordable to at least one type Glamorgan and 17 per cent in North I couldn’t find a property for of household among single people, West Wales are affordable within the that and so I had to use my ESA My benefits have now been couples, and small families. Areas of rates, with families having to budget to top up my Local Housing sorted out and I receive a limited high demand for housing present the to find an extra £11.51 and £8.68 per Allowance, even though that isn’t work capacity payment so biggest challenges to these households. week respectively to afford 30 per cent what it is for. I found a property I can afford the rent. I still of the market. where the rent was £345 and I think it’s wrong that I have to For example, couples needing a one- was just about able to afford it. use this to top up my Local bedroom property could afford just 11 However, the most significant Housing Allowance. per cent of private rents within Cardiff, problem in Wales from Local Housing I then moved from ESA to and face having to budget for an Allowance rates is from the Shared Universal Credit, and my benefits I think the government should extra £11.51 a week to be able to find Accommodation Rate for single people went down even though I still invest more in Local Housing somewhere to live in just under the under the age of 35. In fact, the Shared wasn’t able to work. I was just Allowance because it just isn’t third cheapest rents. Overall, a one- Accommodation Rate presents a getting the standard Universal possible in lots of areas to find a bedroom property was unaffordable in particular challenge across all three Credit allowance of £317 and property without having to top just under a third (seven of 22) of areas nations as shown in figure 1.5. the Local Housing Allowance up the rent. in Wales as shown in figure 1.4. rate of £207, and I just couldn’t In England, shared accommodation afford the rent any more. I am now volunteering in the Café Similarly, for small families there was unaffordable within the Shared at Crisis and it is my ambition to are areas in Wales where they will Accommodation Rate in 123 out of I tried to sort it out with the become a pastry chef.” particularly struggle to find housing 182 areas (81% of the country). This Jobcentre but it was so difficult. unless they top up the support from includes more than a quarter of the There were times when it drove *This is a pseudonym to protect Universal Credit to pay their rent country (27%) where less than five per me to the edge, and I often had their identity. by dipping into other benefits or cent of rents were affordable within to make a decision to eat, heat incurring debt. Small families needing the rates, and 12 areas (8%) where a two-bedroom property face the there is no shared accommodation largest gaps between their actual affordable within the rates. In Scotland rents and Local Housing Allowance and Wales, accommodation was rates. In Cardiff, small families could unaffordable within the Shared afford just ten per cent of the private Accommodation Rate in 55 and 50 rented market within Local Housing per cent of the countries respectively. 28 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Universal Credit must be a key tool to prevent homelessness 29

Figure 1.4 Percentage of the private rented sector that couples needing Figure 1.5. Percentage of the private rented sector that under 35s could a one-bedroom property could afford in Wales within Local Housing afford in Great Britain within Shared Accommodation Rates for 2018/19 Allowance rates for 2018/19

Private rented sector aordability Private rented sector aordability Private rented sector a ordability in England in Scotland in Wales 0 – 5% 0 – 5% 5 – 10% 5 – 10% 0 – 5% 10 – 15% 10 – 15% 5 – 10% 15 – 20% 15 – 20% 10 – 15% 20 – 25% 20 – 25% 15 – 20% 25% and above 25% and above 20 – 25% 25% and above Private rented sector aordability in Wales

0 – 5% 5 – 10% 10 – 15% 15 – 20% 20 – 25% 25% and above

Source: Crisis and CIH analysis using Rent Officers Wales data. Source: Crisis and CIH analysis using Valuation Office Agency data, Rent Service Scotland data, and Rent Officers Wales data.

In Wales this means that there was month, and for small families needing no shared accommodation that is a two-bedroom property it is £53.40 a affordable within the rates in Caerphilly month. However, young people aged and the Vale of Glamorgan. under 25 have a standard monthly to cover the shortfall in rent, this Universal Credit when they need allowance from Universal Credit of would leave them with just £214.77 a urgent financial support to secure their Young people tend to need to budget £251.77 to live off, whereas someone month to live off, or £53.62 a week. homes and avoid homelessness. for smaller amounts to cover the aged over 25 has a standard monthly Particularly given the likelihood of costs of rent, as the gaps between allowance of £317.82 and joint claims additional payments towards debt Increasing the number the Shared Accommodation Rate and for over 25-year olds receive £498.89 recovery being taken out of this of private landlords willing the cheapest rents tend to be less per month. monthly amount, this leaves young to let to tenants receiving than the gaps faced by couples and people with very little to live off. Universal Credit. small families. However, this does not This means that younger people mean young people are at less risk of have less income from which to both Investing in Local Housing Allowance The research outlined has shown homelessness than couples and small live off and try to make up any gaps would have a significant positive that the gaps between 2018/19 families, as they receive less financial between their rent and Local Housing impact on the stability of housing for Local Housing Allowance rates and support overall from Universal Credit. Allowance rates. For example, a young people on low incomes living in the the cost of the cheapest rents makes person aged under 25 living in the private rented sector. This additional it extremely difficult for people on For example, in York, the gap between North West Wales area and needing investment would substantially low incomes to afford their rents. the Shared Accommodation Rate and support from Universal Credit can reduce the severe financial shortfalls This means households are falling the 30th percentile of market rents is receive up to £251.77 a month to pay households experience; helping into rent arrears, which inevitably £23.40 a month. For couples needing for bills, food and other basic living thousands of families and young results in increased pressure on a one-bedroom property it is £59.84 a essentials. With £37 a month needed people and giving them a lifeline from private landlords. 30 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Universal Credit must be a key tool to prevent homelessness 31

Figure 1.6 Change in number of households in England made homeless due Pensions on landlords. The research “You can’t reduce Local Housing to selected immediate causes, 2008/09 – 2016/17 – indexed found that 37 per cent of landlords Allowance from 50th to 30th had evicted, not renewed, or ended percentile, then uprate it beneath 260 tenancies of tenants in receipt of Local rents, then freeze it altogether, Housing Allowance since April 2011. In without this having some 240 End of AST 220 comparison, 27 per cent of landlords impact on tenants’ ability to Mortgage repossession had taken no action against non- afford accommodation – existing 200 Local Housing Allowance tenants.71 or alternative”. 180 Relationship breakdown This means landlords were more likely Participant in Manchester 160 Parental exclusion to take action increasing the risk of Metropolitan University research. 140 homelessness for tenants receiving 120 Local Housing Allowance than those Underinvestment in Local Housing 100 that were not. Allowance rates not only increases (2008/09=100) 80 a tenant’s likelihood of becoming 60 This reaction from private landlords is homeless from the private rented particularly noticeable in areas where sector, but also means that they to specified causes, indexed to specified causes, indexed 40

Households made homeless due 20 the gaps between Local Housing have limited affordable options 0 Allowance rates and market rents available in terms of securing new 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 are impossible for households on accommodation.73 low incomes to overcome through Year budgeting. This means their tenants Similar problems also exist in Scotland are more likely to fall into rent arrears, and Wales. In Wales, the ending of Source: The homelessness monitor England 2018 which is unsustainable particularly an Assured Shorthold Tenancy is a for smaller landlords. As the private growing cause of homelessness as the “More people on low incomes are the ending of an Assured Shorthold rented sector is characterised by small affordability and accessibility of the living in the private rented sector Tenancy in the private rented landlords, with just three per cent of private rented sector is diminishing, – numbers living in poverty in the sector is the single biggest cause of residential stock accounted for by as the sector comes under increased private rented sector doubled in a homelessness.68 It has accounted for mainstream commercial property pressure due to the decline in the decade. This means there are more 78 per cent of the rise in homelessness investors,72 this puts tenants at risk of availability of affordable housing for marginal/precarious tenancies, from 2011 to 2017,69 as shown in figure homelessness. people on low income.74 households who are at risk of 1.6. homelessness due to income shocks, “We have sadly moved away from This is also reflected in research welfare reforms, etc.” 67 Research carried out by Manchester letting to Housing Benefit tenants with councils in Scotland. Unlike in Participant in Manchester Metropolitan University in England as they have struggled to make any England and Wales, the ending of Metropolitan University research. between June 2017 and July top-up payments (and the gap is tenancies in the private rented 2018, on behalf of the Residential now over £500/month for a three- sector does not appear in national As discussed, in many areas the gaps Landlords’ Association, found that the bedroom house).” statistics as a growing cause of are large and extremely challenging underinvestment in Local Housing Participant in Manchester homelessness. However, in the to overcome. This means that to avoid Allowance rates is a key driver of Metropolitan University research. Scotland Homelessness Monitor creating severe financial pressure on the increase in homelessness from 2019, ten out of 27 local authorities tenants, private landlords would need the private rented sector as people (37% of respondents) felt this has to substantially lower their rents to struggle to cover their full rent.70 had greater significance as a cause meet Local Housing Allowance rates. of homelessness in recent years This pressure on tenants and landlords This is also reflected in early research as a result of serious rent arrears, is particularly acute in England, where by the Department for Work and caused by welfare changes.75

67 O’Leary, C., O’Shea, S., and Albertson, K. (2018) Homelessness and the Private Rented Sector. 71 Department for Work and Pensions (2015) The impact of recent reforms to Local Housing Allowances: Manchester: Manchester Metropolitan University. Summary of key findings. London: Department for Work and Pensions. 68 National Audit Office (2017) Report by the Comptroller and Auditor General: Homelessness. London: 72 Rugg, J., and Rhodes, D. (2018) The Evolving Private Rented Sector: Its Contribution and Potential. York: National Audit Office. University of York/Centre for Housing Policy. 69 Shelter (2017) ‘Eviction from a private tenancy accounts for 78% of the rise in homelessness since 2011’: 73 O’Leary, C., O’Shea, S., and Albertson, K. (2018) Homelessness and the Private Rented Sector. https://england.shelter.org.uk/media/press_releases/articles/eviction_from_private_tenancy_accounts_ Manchester: Manchester Metropolitan University. for_78_of_the_rise_in_homelessness_since_2011 74 Welsh Government (2018) Post-implementation evaluation of Part 2 of the Housing Act (Wales) 2014: 70 O’Leary, C., O’Shea, S., and Albertson, K. (2018) Homelessness and the Private Rented Sector. Final Report. Cardiff: Welsh Government. Manchester: Manchester Metropolitan University. 75 Fitzpatrick, S., Pawson, H., Bramley, G., Watts, B., Wood, J., Stephens, M., and Blenkinsopp, J. (2019) The homelessness monitor: Scotland 2019. London: Crisis. 32 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Universal Credit must be a key tool to prevent homelessness 33

Investing in Local Housing Allowance A survey conducted by the Local rates would relieve financial pressure Government Association has on tenants on low incomes, increasing highlighted that 86 per cent of London Councils Case Study the number of landlords willing to let responding councils (151) identified A man (age 47) receives Employment Support Allowance due to to people in receipt of Universal Credit. the affordability of the private rented his severe heart condition. He previously worked for many years, sector as a great or moderate factor but his condition means he is now unable to do so. He does not Providing councils that is making it more difficult to house receive enough from Local Housing Allowance to cover his rent with the tools to better people experiencing homelessness. and is left with a £36 weekly shortfall which he tries to pay from his prevent homelessness 77 Affordability concerns are also Employment and Support Allowance – money which is supposed reflected in the council survey for to cover the extra costs arising from living with a severe health The impact of underinvestment into the England Homelessness Monitor condition. This leaves him with barely enough to meet his essential Local Housing Allowance rates has 2018, which found that 86 per cent costs. He has approached his local council as his landlord has also meant councils across England, of responding councils (185) felt the served him with a section 21 eviction notice. He has been unable Scotland, and Wales are struggling freeze on Local Housing Allowance to find alternative accommodation. His council are attempting to to carry out duties to prevent rates would significantly or slightly prevent him becoming homeless but are currently unable to find him homelessness under their respective increase homelessness in their area.78 alternative affordable accommodation. homelessness legislation. As councils struggle to use both the In England, the introduction of the social and private rented sector to Homelessness Reduction Act (2017) prevent homelessness under the has marked a significant shift in focus Homelessness Reduction Act (2017), sector, citing gaps between Local being difficult or very difficult and that towards homelessness prevention, they are forced into using temporary Housing Allowance rates and market Local Housing Allowance rates were a making it a central part of the statutory accommodation as a route into rents as a significant factor. reason why.82 framework. The Act introduced housing. In the same survey by the a duty on councils to take reasonable Local Government Association, 61 per ‘The Local Housing Allowance for a “The Local Housing Allowance in steps to prevent homelessness if cent of responding councils had seen shared room is just about £60, you’d [name of authority] is far too low someone is at risk of becoming increases in the number of people be lucky to get a shared room in [Y] in comparison to the cost of private homeless within the next 56 days. in temporary accommodation. In for £75-80. A one-bed rate is £90, lets so they are unaffordable” This includes people not considered 21 per cent of areas these increases it’s probably £450 – £500 is the Council respondent, priority need and people likely to be were significant. The length of time lowest end of rents for a one-bed Rest of Scotland.83 found intentionally homeless.76 people are spending in temporary flat in [Y], you’re looking at £650 accommodation also increased for or more… that is the main problem The underinvestment in Local A year into implementation of the Act, 60 per cent of responding councils.79 we’ve had, always had’. Housing Allowance rates has councils are struggling to fulfil their Wales, statutory sector key effectively transferred the funding prevention and relief duties due to In Wales, councils are similarly required informant.81 burden from national to local problems with housing affordability. to take reasonable steps to prevent an government, and councils are Without sufficient social housing in applicant’s homelessness following In Scotland, councils also report struggling under this financial many parts of the country, councils changes introduced by the Housing difficulties with using the private rented pressure. The limited tools that are having to rely on the private rented (Wales) Act (2014). A recent evaluation sector to prevent homelessness. For councils do have at their disposal, sector to fulfil statutory prevention of the Act found that prevention the Scotland Homelessness Monitor such as Discretionary Housing duties. However, as evidenced above activity has been largely successful 2019, councils were asked about Payments, are not generous enough it is increasingly difficult, and in – 65 per cent of people threatened accessibility of the private rented sector to enable councils to successfully some areas impossible, to prevent with homelessness in 2015/16 had in relation to preventing and resolving prevent homelessness for every homelessness as Local Housing their homelessness prevented.80 homelessness. Of the 28 responding household who needs this support. Allowance rates fail to cover the cost However, in some parts of the country local authorities, almost half make use of even the cheapest rents. councils cannot successfully prevent of the private rented sector. However, of Discretionary Housing Payments homelessness using the private rented these areas just five considered it easy can be paid by councils to people 76 Jacob, R. (2018) Preventing homelessness: It’s everybody’s business. London: Crisis. to access the private rented sector for receiving support from Universal 77 Local Government Association (2019) Homelessness Reduction Act Survey 2018 – Survey Report. these purposes, whereas 23 reported it Credit to pay their rent to assist with London: Local Government Association. 78 Fitzpatrick, S., Pawson, H., Bramley, G., Wilcox, S., Watts, B., and Wood, J. (2018) The homelessness 81 Welsh Government (2018) Post-implementation evaluation of Part 2 of the Housing Act (Wales) 2014: monitor: England 2018. London: Crisis. Final Report. Cardiff: Welsh Government. 79 Local Government Association (2019) Homelessness Reduction Act Survey 2018 – Survey Report. 82 Fitzpatrick, S., Pawson, H., Bramley, G., Watts, B., Wood, J., Stephens, M., and Blenkinsopp, J. (2019) London: Local Government Association. The homelessness monitor: Scotland 2019. London: Crisis. 80 Fitzpatrick, S., Pawson, H., Bramley, G., Wilcox, S. and Watts, B. (2017) The Homelessness Monitor: Wales 83 Fitzpatrick, S., Pawson, H., Bramley, G., Watts, B., Wood, J., Stephens, M., and Blenkinsopp, J. (2019) 2017. London: Crisis. The homelessness monitor: Scotland 2019. London: Crisis. 34 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Universal Credit must be a key tool to prevent homelessness 35

shortfalls that arise as a result of Previously, as increased Targeted and families that will not be able to welfare changes. The Westminster Affordability Funding has been made increase their income through work in Government funds Discretionary available the funding for Discretionary the short term, due to circumstances Housing Payments for England and Housing Payments that is allocated such as illness or caring duties. Wales, but the Scottish Government is for Local Housing Allowance rates Eventually, without the support from responsible for the payments. has been reduced.87 However, as Discretionary Housing Payments, outlined, Targeted Affordability these households will again be at risk Given the wide range of welfare Funding has largely been insufficient of homelessness, but they are limited changes in the last decade, there are in making up the gaps between the in the ways they can try to make up multiple competing priorities for these cheapest rents and the Local Housing the income themselves or find more payments. Last year, 13 per cent of the Allowance rates. affordable housing. total amount for Discretionary Housing Payments for England and Wales was Therefore, reductions in the amount of Investment in Local Housing spent on the impact of underinvestment funding available through Discretionary Allowance rates will provide councils in Local Housing Allowance rates, Housing Payments further impedes with much needed housing options compared to 28 per cent on the benefit the ability of councils to prevent and to secure stable housing and fulfil cap. In Scotland, the government has respond to homelessness. The limited prevention duties as required by prioritised using Discretionary Housing funding and local discretion about statutory homelessness legislation. Payments to mitigate the impact of the how councils can award the payments In England, this will help secure the Spare Room Subsidy, commonly known has raised concerns about a ‘postcode success of the recently implemented as the .84 lottery’ of support, and strict criteria Homelessness Reduction Act (2017). being applied to access the payments.88 Making sure Local Housing Allowance Councils in England and Wales report rates meet the cost of actual rents that Discretionary Housing Payments Discretionary Housing Payments will increase the affordability of the do not meet demand.85 This has also cannot therefore be used to prevent private rented sector for people on been raised by the National Audit Office homelessness to the extent to which the lowest incomes and ensure that in their report into the changes to Local they were intended to. rent payments can be maintained and Housing Allowance rates. The National housing secured. Audit Office found that from 2011/12 “…we’ve got discretionary housing to 2014/15 it was unclear whether payments at the moment but they funding for Discretionary Housing are discretionary. It’s not guaranteed Payments would be sufficient to tackle funding year on year, and even people the reforms, and the total amount who’ve got secured tenancies now represented six per cent of the total are facing severe financial problems savings expected from the changes to and it’s not going to be easy.” Local Housing Allowance rates.86 Wales, statutory sector key informant.89 The amount of funding made available fluctuates and has been impacted This means they are a particularly by Targeted Affordability Funding. unsuitable solution for individuals

84 Fitzpatrick, S., Pawson, H., Bramley, G., Watts, B., Wood, J., Stephens, M., and Blenkinsopp, J. (2019) The homelessness monitor: Scotland 2019. London: Crisis 85 Work and Pensions Select Committee (2017) ‘Benefit cap “starting to bite” across Britain https://www. parliament.uk/business/committees/committees-a-z/commons-select/work-and-pensions-committee/ news-parliament-2015/benefit-cap-evidence-16-17/ 86 National Audit Office (2012), Report by the Comptroller and Auditor General: Managing the impact of Housing Benefit reform. London: National Audit Office. 87 S1/2019: 2019-20 Discretionary Housing Payments government contribution for English and Welsh local authorities (Revised) https://www.gov.uk/government/publications/housing-benefit-subsidy- circulars-2019/s12019-2019-20-discretionary-housing-payments-government-contribution-for-english- and-welsh-local-authorities 88 House of Commons (2014) Support for housing costs in the reformed welfare system: Fourth report of session 2013-14. London: House of Commons Work and Pensions Committee. 89 Fitzpatrick, S., Pawson, H., Bramley, G., Wilcox, S., Watts, B., and Wood, J. (2017) The homelessness monitor: Wales 2017. London: Crisis. 36 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Ensuring that Universal Credit rapidly responds to homelessness 37

Ensuring that Universal Credit rapidly responds to homelessness

Wherever possible, homelessness Investment in Local Housing should be prevented. When it does Allowance rates will significantly occur it should be rare, brief, and improve the ability of Universal non-recurrent.90 A critical way to Credit to act as an effective tool for achieve this is for Universal Credit councils and Jobcentres. This includes to help people rapidly access increasing their ability to work with support with housing costs to find private landlords and rapidly support and secure available housing. For people into stable housing. It should people in hostels or temporary also be an essential component of any accommodation, Universal Credit is homelessness strategy and a properly the lifeline to support them to move funded housing support system. on from homelessness and into stable This will be critical in ensuring housing, giving them the best chance the success of the Westminster of fulfilling their aspirations, such as Government’s commitment to end entering, or progressing in, work. rough sleeping in England by 2027, and the Scottish Government’s Action Plan for Ending Homelessness.

90 Downie, M., Gousy, H., Basran, J., Jacob, R., Rowe, S., Hancock, C., Albanese, F., Pritchard, R., Nightingale, K., and Davies, T. (2018) Everybody In: How to end homelessness in Great Britain. London: Crisis 38 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Ensuring that Universal Credit rapidly responds to homelessness 39

Enabling councils to rapidly since 2010.93 Analysis by the National respond to homelessness Audit Office found that in 2015/16, Solace Women’s Aid Case Study properties on the ground floor of apartment by opening up the private councils spent around £1.1 billion on The Amari Project is a housing project buildings, and those outside her local area. rental market and increasing homelessness, with two-thirds (£845 provided by Solace Women’s Aid with These were unsuitable as Mia needed to stay million) of this spent on crisis responses Commonweal Housing and support from in the locality to continue engaging with landlord confidence in by sustaining people in temporary London Councils. It supports women services. She also suffers from Agoraphobia, Universal Credit accommodation.94 Recent research who have been sexually exploited through a type of anxiety disorder that means Mia When homelessness happens, the by Inside Housing suggests that this trafficking or prostitution to become is terrified of someone being able to gain underinvestment in Local Housing amount has increased. Their analysis of independent and make sustainable access to the flat if it is on the ground floor Allowance rates prevents people from Freedom of Information requests shows positive change in their lives free from and hurt her. In addition, the properties being able to move on from different that 290 of 326 councils in England exploitation, hardship, and vulnerability. were single bed studios, 18 square metres types of homelessness such as rough spent almost £1 billion on temporary It does so by providing temporary second or so, causing Mia anxiety and exacerbating sleeping, sofa surfing, living in a hostel, accommodation in 2017/18.95 stage accommodation following their her mental health issues. or being in unsuitable temporary departure from refuges or other emergency accommodation such as a B&B. It also As council respondents stated in accommodation, helping them to build ‘By moving into a shoebox I feel like creates a significant barrier for people the Local Government Association’s resilience and recover from trauma through they want my mental health to decline. trying to secure stable housing such as research on the Homelessness a staged approach. The accommodation When I moved in to Amari I bought a domestic abuse survivors, care leavers, Reduction Act (2017): is provided to women for up to 18 months. double bed. It meant so much to me, or people leaving prison. These The main aim of the project is to help because I have never owned anything, groups are already over-represented in “…[it is] very rare to have anything women develop independent living skills not a piece of furniture, nothing. I am homelessness cases. within current Local Housing and to provide the space and time to focus worried I’ll lose it now ’. – Mia, Survivor Allowance rates, means we have less on their recovery. It is a stepping stone to The human cost of entrenched and options to relieve homelessness…. independent living. There is currently no one-bedroom repeated homelessness is significant. We currently have approximately property available to Mia in London, There is also an economic cost of 1500 placements in temporary Mia is a survivor of sexual exploitation within the Local Housing Allowance rates sustaining homelessness as councils accommodation with majority out of through prostitution. On fleeing the violence available for single women. From November are forced to spend on expensive borough as far away as [area name]. she spent time in first stage emergency 2018 until present, Mia has not been offered temporary accommodation. A key Unable to provide a local service to accommodation, subsequently referred to any viewings. The council Housing Options factor is that councils increasingly local people anymore.” the Amari Project in November 2016. In Department, have stated that they find it struggle to use the private rented sector refuge Mia had access to a high level difficult to find any property in her local area to discharge homelessness duties. “We have particular problems in of support and welcomed the stepping within the rate of the current Local Housing securing affordable accommodation stone to independent living by moving into Allowance. Mia has, as a result of this, been In England, homeless placements in with the required security and a fully furnished flat with support when overstaying in The Amari Project – living in temporary accommodation have risen welcome… Local Housing Allowance needed. Mia was assisted to access other second stage accommodation for over two sharply since 2010/11. In the year to rates that would help make tenancies support services in her local area including years because there is at this time simply no March 2018, the placements rose to more affordable”. engaging with a mental health team and other suitable accommodation available to over 82,000 – up by 71 per cent from taking part in community skills workshops. her. its low point seven years earlier.91 A “We currently have limited options Mia was making excellent progress and her continuation of this trend would see for housing. Our private rented has expected move out date was scheduled Other Amari Project service users have homeless placements topping 100,000 a top up. Our two-bedroom private for 18 months after she moved in to give experienced similar issues, receiving by 2020.92 This is having a huge impact rented is now over £50 a week above her enough time to build resilience and find inappropriate offers to share communal on council budgets, straining existing the Local Housing Allowance. There is suitable housing. facilities with men or to be housed in financial pressure on councils given a lack of affordable house shares for unsafe areas, such as areas associated the cuts in general funding to councils under 35’s”. 96 In April 2018 Mia was referred to the with past trauma. The housing crisis in 91 Ministry of Housing, Communities, and Local Government (2018) ‘Statutory Homelessness Live Tables: Privately Rented Scheme in her local London, exacerbated by low Local Housing Temporary accommodation tables’ https://www.gov.uk/government/statistical-data-sets/live-tables-on- area. This scheme was designed to offer Allowance rates, along with the limited homelessness reasonable private rented accommodation availability of accommodation suitable for 92 Fitzpatrick S., Pawson, H., Bramley, G., Wilcox, S., Watts, B., and Wood, J. (2018) The Homelessness Monitor: England 2018. London: Crisis. to service users, however the properties women survivors of sexual exploitation, 93 London Councils (2018) London’s local services: investing in the future. London: London Councils. offered to Mia were unsuitable – with is impacting on the successful long-term 94 National Audit Office (2012), Report by the Comptroller and Auditor General: Managing the impact of very little availability given one-bedroom resettlement of Amari service users. Housing Benefit reform. London: National Audit Office. Local Housing Allowance rates in London. 95 Inside Housing (2018) ‘Councils’ temporary accommodation spend nears £1 billion’ https://www. Through this scheme Mia was only offered insidehousing.co.uk/news/news/councils-temporary-accommodation-spend-nears-1bn-57695 96 Local Government Association (2019) Homelessness Reduction Act Survey 2018 – Supplementary Report. London: Local Government Association. 40 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Ensuring that Universal Credit rapidly responds to homelessness 41

The pressure is felt most in London, This includes councils having to rely on Figure 1.7 Homeless households in temporary accommodation in Scotland with councils making the majority the use of emergency accommodation at end of financial year 2018 of all temporary accommodation for extended periods, sometimes up to placements. Research commissioned two years. Emergency accommodation 12000 by London Councils estimated that includes hostels with no support or the cost of provision for temporary basic B&B accommodation, with either 10000 accommodation in London shared or no basic living facilities, boroughs was in excess of £663 such as kitchens or laundry. This is million in 2014/15.97 However, as the particularly the case in areas of high 8000 affordability of the private rented housing demand such as Edinburgh,101 sector is increasingly a problem across where the Local Housing Allowance 6000 England, temporary accommodation rates cover less than ten per cent of placements are rising faster elsewhere the market. 4000 in England and eroding this London dominance.98 Research by Crisis looking at people’s

experience of living in unsuitable Number of households 2000 In Wales, there is a similar trend with temporary accommodation found official data showing there were that temporary accommodation can 0 2,142 households in temporary be unsuitable for the needs of people accommodation in June 2018 – the placed there, and the environment 2002 200320042005 2006 2007 20082009 2010 2011 2012 2013 2014 2015 2016 2017 2018 highest number to date.99 This follows can significantly impact mental health increases in the number of households and well-being.102 This increases the As at 31 March each year in temporary accommodation from risk of people being forced to sleep 2016 to 2017.100 rough if they don’t feel that they can stay in temporary accommodation and Social TFF* B&B Hostel Other In Scotland, the lack of affordable there are no other affordable housing housing options for people options available to them. experiencing homelessness has led to Source: The Homelessness Monitor Scotland 2019 an increasing number of people staying “I was robbed a few times – didn’t *TFF = Temporary furnished flat in temporary accommodation for long feel safe.” periods, while they wait for a settled home to become available. Figure “…it was like a big smack den, but on The rising pressure to provide and well-being. Crisis’ own Skylight 1.7 shows the increase in the use of a street level rather than house level. temporary housing for people services are finding it increasingly temporary accommodation in Scotland. There must be 30 people in temp…. experiencing homelessness has difficult to secure decent private rented While part of the increase is attributable 50 per cent are using drugs. In fact, created opportunities for exploitation. housing for single homeless people. to more people being eligible for the staff were using cocaine in the Analysis by Julie Rugg and Peter support for homelessness as a result kitchen with residents so what can Rhodes of the private rented sector The increasing gaps between Local of the removal of priority need, there you do. I started using drugs there as in England concluded that temporary Housing Allowance rates and market has also been an increase in the use of well – due to my mental state and my accommodation can put people at rents have also meant landlords are unsuitable temporary accommodation. environment I went downhill.”.103 risk of “very high levels of insecurity, less likely to rent to people receiving inflated rents, acute overcrowding support from the welfare system.105 and often extremely poor property These genuine affordability concerns 97 Rugg, J. (2016) Temporary Accommodation in London: Local Authorities under Pressure. Centre for conditions”.104 have then been exacerbated by issues Housing Policy. York: Centre for Housing Policy/University of York. with administrative delays and errors of 98 Fitzpatrick S., Pawson, H., Bramley, G., Wilcox, S., Watts, B., and Wood, J. (2018) The Homelessness Monitor: England 2018. London: Crisis. This leave people experiencing Universal Credit, which is leading to an 99 Welsh Government, Homelessness statistics https://gov.wales/statistics-and-research/ homelessness vulnerable to poor overall lack of trust in the system from homelessness/?lang=en quality, unsafe, or overcrowded private landlords.106 100 Welsh Government (2018) Post-implementation evaluation of Part 2 of the Housing Act (Wales) 2014: homes, which jeopardises their health Final Report. Cardiff: Welsh Government. 101 Sanders, B. with Reid, B. (2018) I won’t last long in here: Experiences of unsuitable temporary 104 Rugg, J and Rhodes, D. (2018) Vulnerability amongst low income households in the private rented accommodation in Scotland. London: Crisis. sector. York: University of York/Centre for Housing Policy. 102 Sanders, B. with Reid, B. (2018) I won’t last long in here: Experiences of unsuitable temporary 105 Fitzpatrick S., Pawson, H., Bramley, G., Wilcox, S., Watts, B., and Wood, J. (2018) The Homelessness accommodation in Scotland. London: Crisis. Monitor: England 2018. London: Crisis. 103 Sanders, B. with Reid, B. (2018) I won’t last long in here: Experiences of unsuitable temporary 106 O’Leary, C., O’Shea, S., and Albertson, K. (2018) Homelessness and the Private Rented Sector. accommodation in Scotland. London: Crisis. Manchester: Manchester Metropolitan University. 42 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Ensuring that Universal Credit rapidly responds to homelessness 43

stating this is because tenants struggled For councils, it means that a to keep up with paying the rent and 23 household hit by the cap in the private Chris*, 32, Crisis client per cent saying this is because tenants rented sector will likely end up at risk “I became homeless when I left prison, Because I am in supported housing, could not pay full rent. of (repeat) homelessness. as I had nowhere to stay. I moved into a the support to pay rent that I get is about hostel but I was told that I could only stay £275 a week. It seems daft that I am in a Investing in Local Housing Allowance “You’d settle a family into private there for three months. supported housing tenancy that I don’t need, rates will provide councils with much rented accommodation and then the and its costing the government more to needed housing options to secure benefit cap came in and different I just wanted a place of my own in Sunderland keep me there than if I was able to afford a safe, stable and sustainable housing things, they can’t meet that rent so I signed up for Crisis’s tenancy training property on Local Housing Allowance. to fulfil prevention and relief duties. anymore… you think – oh the family, course, Renting Ready while I was in the It will also address the affordability you’re just about to finish supporting hostel. On the course I did work on budgeting Without Crisis and the hostel I would have concerns from landlords and mean them than all of a sudden there’s such for a tenancy and I also found out how much been sleeping rough. All I want for the future they are able to rent to people on low a big change to their income, they’re Local Housing Allowance I would get. is to get back into work, and to move into a incomes in receipt of Universal Credit. in flux for quite a long time then… flat of my own so that someone who really As the system continues to roll out which has an effect on housing”. I also had a Housing Coach at Crisis and he needs my supported tenancy can have it. and improvements are continuously Key informant statutory sector, helped with property searching, but because I made to the functioning of the Wales.109 am 32 I was only entitled to about £47 a week It would make a massive difference if the system, including around delays in Local Housing Allowance. I just couldn’t find a government invested more into Local rent payments, it is essential that the For increased investment into Local private rented property that I could afford. Housing Allowance because in my case underlying concerns with affordability Housing Allowance rates to have a it would actually save them money, and are also addressed to restore landlord positive impact on homelessness, it When I was told by the hostel that I had to it would free up supported housing for confidence and trust in the system. is important that this investment is leave, they helped me by referring me for someone that really needs it.” not undermined by the impact of the supported housing. I was given a flat in a Additional pressures on benefit cap policy. Any investment shared property and it stopped me from *This is a pseudonym to protect their tenants that interact with into Universal Credit through Local becoming homeless and so I took it. If I’m identity. Local Housing Allowance rates Housing Allowance cannot result in honest I don’t need supported housing – more households being subject to the I just need a place of my own. As discussed, the underinvestment in benefit cap as this would simply limit Local Housing Allowance rates are a the positive impact of Local Housing key driver of affordability concerns, Allowance on housing stability. impacting people on low incomes, Increasing the numbers of individuals Centrepoint services in England find just 18 and 17 per cent for couples councils, and landlords. However, and families impacted by the benefit that young people leaving supported needing a one-bed property and small there are also other areas of welfare cap will result in these households accommodation struggle to find families needing a two-bed property policy that, when interacting with facing impossible choices around accommodation to move on to that respectively. Local Housing Allowance rates, whether to pay rent or for essentials is affordable. In their recent research, exacerbate these issues. like bills and food. almost three in ten private landlords Crisis conducted an online survey from (29%) surveyed said they would not February to March 2019 on behalf of This is especially seen by the impact of As well as investing in Local Housing rent to a young person moving on Highland Council in Scotland with the benefit cap. The benefit cap was Allowance rates, the Westminster from homelessness accommodation private landlords. The preliminary introduced in 2013. The current level of Government must review the benefit because Local Housing Allowance findings of the research have found that the cap means that families receiving cap and include greater flexibility rates in their area were too low.107 one of the key reasons landlords are support from Universal so that it does not increase the unwilling to rent to people receiving Credit cannot receive more than risk of homelessness or prevent These affordability concerns from benefits is concerns around rent £23,000 a year in London (£15,410 Universal Credit from rapidly landlords, impacting whether they arrears. Of the 127 landlords who for single people), and £20,000 a year responding to homelessness. can rent to people on low incomes, responded saying they were unwilling in the rest of Great Britain (£13,400 are also seen in Scotland. In the to rent to people on benefits, 55 per for single people). There is evidence Highlands and Islands area of Scotland, cent stated it was because of concerns to show that the cap puts households just 17 per cent of the private rented over rent arrears. Forty-seven landlords at risk of homelessness, and particularly sector was affordable for young also indicated that they have had bad affects families with children.108 single people receivingthe 2018/10 experiences renting to people on 108 Downie, M., Gousy, H., Basran, J., Jacob, R., Rowe, S., Hancock, C., Albanese, F., Pritchard, R., Shared Accommodation Rate, and benefits, with 55 per cent of these Nightingale, K., and Davies, T. (2018) Everybody In: How to end homelessness in Great Britain. London: Crisis 107 Centrepoint (2018) Ready to Move On: Barriers to homeless young people accessing longer-term 109 Welsh Government (2018) Post-implementation evaluation of Part 2 of the Housing Act (Wales) 2014: accommodation. London: Centrepoint. Final Report. Cardiff: Welsh Government. 44 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Conclusion 45

Such an investment would be strongly welcomed by a broad range of housing and homelessness organisations working on the front line; including councils, private Conclusion landlords, homeless charities, and most importantly people experiencing or at risk of homelessness.

With adequate investment and the right policies in place, Universal Credit Being able to secure a stable home shows there were 2,124 households can be one of the best homelessness gives people the best chance of in temporary accommodation in prevention tools at the government’s moving on from homelessness or September 2018.113 disposal in order to end homelessness preventing it altogether. Having both and rough sleeping in Britain for good. housing and welfare policies designed Unless immediate measures are put together around a shared goal of in place to help people secure homes ending homelessness is the most and make the private rental market a effective way to deliver meaningful more affordable option for people on sustained outcomes. the lowest income, the numbers of people experiencing homelessness In the long-term, national will continue to rise. Investing in governments must ensure that there Local Housing Allowance rates would is a sufficient supply of housing that have the most immediate impact in is genuinely affordable for people on improving affordability and therefore the lowest incomes. In England, this reducing homelessness. involves significantly increasing the supply of social housing. However, Currently, Local Housing Allowance building the necessary supply of rates under Universal Credit are social homes needed across Britain frozen until 2020. There is an will take time. The need to address important opportunity in the affordable housing for homelessness upcoming Spending Review for the right now is critical. Westminster Government to invest sufficiently in these rates to bring Since 2010 rough sleeping in England them back in line with a larger has increased by 165 per cent despite proportion of the private rental a small drop of two per cent in market. This would help to ensure the last 12 months.110 In Scotland, Universal Credit is adequately statutory homelessness increased resourced and sufficiently equipped from April 2017 to March 2018,111 and to stabilise housing and support long stays in unsuitable temporary the Westminster Government’s accommodation112 have meant the manifesto commitments on reducing Government are increasingly looking to homelessness and ending rough the private rented sector as a solution sleeping in England. to homelessness. In Wales, official data

110 The government’s rough sleeping count is based on estimates and counts of the number rough sleepers in England, carried out by local authorities between 1 October and 30 November 2018. The 2018 figures are a decrease of 2% since 2017, and a 94% increase from five years ago and 165% since 2010. https://www.gov.uk/ government/statistics/rough-sleeping-in-england-autumn-2018 111 National Statistics, Homelessness in Scotland 17 – 18 https://www.gov.scot/publications/homelessness- scotland-2017-18/pages/8/ 112 Sanders, B. and Reid, B (2018). ‘I won’t last long in here’: Experiences of unsuitable temporary accommodation in Scotland. Edinburgh: Crisis. 113 Welsh Government, Homelessness statistics https://gov.wales/statistics-and-research/ homelessness/?lang=en 46 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Appendix A 47

to the age of 35, one-bedroom accommodation would house couples or single people over the age of 35, and two-bedroom accommodation Appendix A: would house small families which included a couple with two children of school age or a lone parent of one child of school age. Research As the published Local Housing Allowance rates for 2018/19 included the rates that were lifted by Targeted Affordability Funding, we looked at the rates that received Targeted methodology Affordability Funding and the percentage of the market that was affordable within these rates. This highlighted the inadequacy of Targeted Affordability Funding in many areas. The impact of Targeted Affordability In 2018, Crisis and the Chartered Officers Wales and was the 2018/19 Funding has also been further analysed Institute of Housing jointly undertook rental data collected for determining by the Chartered Institute of Housing research to understand the impact the 30th percentile of market rents in following this research in their of cumulative underinvestment into Broad Rental Market Areas. report Missing the target: Is Targeted Local Housing Allowance rates. The Affordability Funding doing its job?. research considered the impact on the For the data from England, Crisis used affordability of the private rented sector the graphs published on the Valuation The full set of results from the joint to single people, couples and small Office Agency website for each Local Crisis and Chartered Institute of families on low incomes. This included Housing Allowance rate for 2018/19. Housing research into Local Housing households in work and not in work. Using an algorithm, data for rents was Allowance rates by each country and scraped from these graphs. A margin Broad Rental Market area is set out in This report focuses on households not of error was then determined against the following tables. in work and therefore at highest risk of the published 30th percentile rates. homelessness where Universal Credit does not adequately cover the cost This data was then used to of rent. The methodology outlined understand what percentage of local therefore refers to the research market rents were covered by Local conducted for households not in work. Housing Allowance rates for shared The full research, including the impact accommodation, one-bedroom on households in work, is outlined in accommodation and two-bedroom Chapter 10, ‘Making Welfare Work’ in accommodation. As we were Crisis’ report Everybody In: How to end considered people unable to work, homelessness in Great Britain.114 they would be entitled to the full Local Housing Allowance rates, up to the To conduct the research, Crisis and the national caps or the benefit cap. Chartered Institute of Housing used We applied the maximum Local rental data of local rents from the 0 to Housing Allowance rates to the rental 100 percentiles by Broad Rental Market data in each Broad Rental Market Area from the Valuation Office Agency Area to give us the maximum rental (VOA), Rent Service Scotland, and Rent percentile that the rents covered. Officers Wales. The data for Scotland and Wales was provided directly We assumed shared accommodation from Rent Service Scotland and Rent would house single people up 114 Downie, M., Gousy, H., Basran, J., Jacob, R., Rowe, S., Hancock, C., Albanese, F., Pritchard, R., Nightingale, K., and Davies, T. (2018) Everybody In: How to end homelessness in Great Britain. London: Crisis 48 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Appendix A 49

Table for England Yorkshire Humber Halifax 18 30 15 continued Harrogate 20 17 12 Region Broad Rental % affordable within % affordable % affordable Hull & East Riding 24 7 9 Market Area 2018/19 Shared within 2018/19 within Kirklees 30 31 30 Accommodation rates Local Housing 2018/19 Local for young single Allowance one Housing Leeds 35 13 12 people under 35 bedroom rates Allowance Richmond & 19 35 31 for couples two bedroom Hambleton and single rates for Rotherham 8 9 36 people 35 and small families Scarborough 6 14 17 over Scunthorpe 19 11 12 North East Darlington 2 30 31 Sheffield 24 16 15 Durham 30 34 30 Wakefield 1 12 32 Northumberland 0 17 16 York 12 15 12 Sunderland 1 30 30 East Midlands Chesterfield 21 10 11 Teesside 19 32 30 Derby 21 17 13 Tyneside 13 34 17 Grantham & 8 13 16 North West Barrow-in- 2 11 10 Newark

Furness Leicester 9 16 18 Bolton and Bury 1 13 7 Lincoln 23 23 15 Central Greater 17 10 11 Lincolnshire Fens 12 11 6 Manchester North Nottingham 9 15 9 Central Lancs 11 30 16 Northampton 14 3 5 East Cheshire 16 15 13 Northants Central 7 7 3 East Lancs 11 35 17 Nottingham 24 12 17 Fylde Coast 30 31 18 Peaks & Dales 26 36 12 Greater Liverpool 15 30 14 Wolds and Coast 6 12 16 Kendal 24 19 14 West Midlands Birmingham 20 6 5 Lancaster 13 30 31 Black Country 9 14 9 North Cheshire 0 19 17 Coventry 3 8 6 North Cumbria 14 33 15 Eastern 18 9 9

Oldham & 8 18 10 Staffordshire Rochdale Herefordshire 8 14 19 South Cheshire 6 19 19 Mid Staffs 16 14 11 Southern Greater 1 7 6 Rugby & East 0 5 1 Manchester Shropshire 13 16 14 Southport 14 32 33 Solihull 3 26 17 St Helens 22 30 35 Staffordshire 7 31 12 Tameside & 21 12 12 North Glossop Warwickshire 3 6 6 West Cheshire 12 15 15 South West Cumbria 1 35 33 Worcester North 9 15 16 West Pennine 16 34 30 Worcester South 27 4 14 Wigan 21 34 36 East of England Bedford 3 2 2 Wirral 32 36 42 Bury St Edmunds 0 5 5 Yorkshire Humber Barnsley 29 10 14 Cambridge 7 4 2 Bradford & South 22 13 18 Central Norfolk & 17 11 5 Dales Norwich Doncaster 15 18 19 Grimsby 19 31 11 50 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Appendix A 51

East of England Chelmsford 0 9 6 South East Brighton and 14 6 5 continued Colchester 26 10 11 continued Hove Harlow & 1 4 3 Canterbury 6 15 9 Stortford Cherwell Valley 8 6 8 Huntingdon 12 5 5 Chichester 10 13 10 Ipswich 0 5 5 Chilterns 13 1 6 Kings Lynn 12 10 11 Crawley & Reigate 6 6 6 Lowestoft & Great 19 13 14 Dover-Shepway 15 8 10 Yarmouth East Thames 15 5 5 Luton 4 3 7 Valley Peterborough 13 7 8 Eastbourne 20 4 5 South East Herts 7 4 9 Guildford 0 7 9 South West Essex 11 3 2 High Weald 22 6 7 South West Herts 6 3 1 Isle of Wight 12 12 13 Southend 22 6 5 Maidstone 1 7 7 Stevenage & 8 5 2 Medway & Swale 44 5 7 North Herts Milton Keynes 12 5 3 London Central London 0 0 0 Newbury 24 4 4 Inner East London 7 4 2 North West Kent 10 6 6

Inner North 1 5 2 Oxford 2 12 10 London Portsmouth 11 8 7 Inner South East 0 4 7 Reading 4 8 6 London Southampton 16 6 6 Inner South West 5 7 1 Sussex East 13 7 11 London Thanet 0 1 4 Inner West 5 4 5 Walton 3 4 3 London Winchester 7 5 8 North West 0 5 4 London Worthing 26 10 9 Outer East 1 1 1 South West Bath 5 7 7 London Bournemouth 9 8 9 Outer North East 8 1 1 Bristol 5 3 1 London Cheltenham 8 16 15 Outer North 6 5 2 Exeter 26 21 15 London Gloucester 21 12 8 Outer South East 15 4 3 Kernow West 8 21 18 London Mendip 11 9 8 Outer South 2 2 3 Mid & East Devon 7 18 16 London Mid & West 12 13 14 Outer South West 0 6 6 Dorset London North Cornwall & 4 26 30 Outer West 1 2 6 Devon Borders London North Devon 9 34 14 South East Ashford 6 4 7 Plymouth 18 8 9 Aylesbury 14 4 7 Salisbury 5 9 10 Basingstoke 16 7 7 South Devon 18 21 9 Blackwater Valley 24 12 5 Swindon 1 4 3 52 Cover the Cost: how gaps in Local Housing Allowance are impacting homelessness Appendix A 53

South West Taunton & West 17 10 11 Table for Wales continued Somerset West Wiltshire 5 6 5 Broad Rental Market % affordable % affordable % affordable Weston-S-Mare 17 17 14 Areas within 2018/19 within 2018/19 within 2018/19 Yeovil 22 17 13 Shared Local Housing Local Housing Accommodation Allowance rates Allowance rates Rates for young for one-bedroom for two-bedroom Table for Scotland single people accommodation for accommodation Broad Rental Market % affordable within % affordable % affordable under 35 couples and single for small families Area 2018/19 Shared within 2018/19 within 2018/19 people 35 and over Accommodation rates Local Housing Local Housing Caerphilly 0 29 29 for single people Allowance rates Allowance rates Vale of Glamorgan 0 32 16 under 35 for one-bed for two-bed Neath Port Talbot 1 24 28 accommodation accommodation North West Wales 2 17 17 for couples and for small families Pembrokeshire 5 30 30 single people 35 Swansea 8 24 23 and over North Clwyd 9 35 25 Aberdeen and Shire 33 28 30 Carmarthenshire 11 18 29 Argyll and Bute 23 21 27 South Gwynedd 11 22 23 Ayrshires 18 46 36 Flintshire 17 17 20 Dumfries and Galloway 27 25 34 Brecon and Radnor 18 30 36 Dundee and Angus 24 19 20 Cardiff 21 17 10 East Dunbartonshire 14 25 8 Torfaen 21 30 23 Fife 19 17 18 Wrexham 23 20 20 Forth Valley 13 30 15 Monmouthshire 24 24 28 Greater Glasgow 10 13 9 Blaenau Gwent 27 14 22 Highlands and Islands 19 18 17 Merthyr Cynon 27 15 33 Lothian 11 3 7 Taff Rhondda 28 13 24 North Lanarkshire 14 30 28 North Powys 42 27 21 Perth and Kinross 19 10 12 Newport 63 21 25 Renfrewshire/ 24 33 22 Bridgend 64 20 25 Inverclyde Ceredigion 71 22 17 Scottish Borders 28 19 30 South Lanarkshire 29 22 30 West Dunbartonshire 29 27 39 West Lothian 17 17 8

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