Homelessness Spike Threat As Private Rents Soar

London faces a possible homelessness spike this winter due to the cost-of-living crisis and increases in private rents, a group of councils has warned.

The cross-party group called London Councils claims that its research shows fewer than one in 10 properties listed for private rent in the capital are affordable to Londoners who depend on welfare support for meeting their housing costs.

London Councils also estimates 125,000 low-income households in the capital are at heightened risk of homelessness because their benefit entitlement now falls short of meeting their rent. 

Amid fears that skyrocketing inflation and energy bills will drive worsening cost-of-living pressures in the coming months, the group is urging the government to increase Local Housing Allowance rates to cover at least 30 per cent of local market rents.

Households eligible for LHA receive it as part of their housing benefit or Universal Credit payment to cover their housing costs if they have a private landlord. Just over 423,000 Londoners receive LHA.

The research into affordability in London’s private rented sector for households receiving LHA was undertaken by Savills after being commissioned by Capital Letters, a not-for-profit company launched by the London boroughs to secure private rented accommodation for homeless households.

Key findings from the research include:

– average rents are now higher than their pre-pandemic levels in all London boroughs. London rents have increased by an average of 15.8 per cent over the year to June 2022;

– part of the reason for rents increasing during 2021 and early 2022 has been the significant fall in supply. The number of properties listed to rent across London in the first quarter of 2022 was 35 per cent lower than the pre-Covid quarterly average;

– this has had a double impact on the number of properties affordable at LHA rates. The fall in supply combined with increasing rents means the overall size of the rental market is decreasing, as is the proportion of the market which is affordable;

– in 2021/22 only 8.8 per cent (18,072 out of 206,067) of all properties listed for rent in London were affordable on LHA. This has reduced from 12.9 per cent in 2020/21. In central London just 1.3 per cent of properties were affordable in 2021/22.

Analysis of government data by London Councils has identified around 125,000 low-income London households at particular risk of homelessness because their benefit entitlements fall short of covering their rent. Many more thousands of households who are already classed as homeless are effectively trapped in temporary accommodation because restricted LHA rates make it impossible to find secure and affordable accommodation in the private rented sector.

Councillor Darren Rodwell, a London Councils spokesperson, says: “The combination of rising rents and the worsening cost-of-living crisis means many tens of thousands of Londoners are at real risk of homelessness in the coming months.

“Just as the government boosted LHA to help households avoid homelessness during the pandemic, it’s vital that LHA is restored once again to cover at least 30 per cent of market rents. Increasing LHA would bring much-needed relief to Londoners struggling with housing costs.

“Without urgent action, we’re worried we’ll see growing numbers of low-income households unable to afford their rent and becoming homeless. The consequence for those Londoners could be devastating. We’re keen to work with ministers on this important issue, as tackling homelessness is a priority for us all.”

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