Title

When the Government announced in June it would be reducing the amount that people could claim on local housing allowance (LHA), the initial view was that it was taking action to address the problem of a small minority of landlords who have been charging high rents for those living in large houses. It did not take long before it was clear that there were more far-reaching implications in London, with 82,000 households likely to be affected by changes to the LHA, resulting in more than 250,000 people, potentially losing their homes. John O'Brien is chief executive of London Councils Under current government plans, from next April, the maximum LHA rates payable will be capped nationally at £250 a week for a one-bedroom property to £400 a week for a four-bedroom home. More changes the following October will mean that tenants receiving LHA will only have access to the bottom 30% of the market instead of the bottom half, as they do now. The impact across the country will be huge, but nowhere more so than in London. Many councils look to private accommodation to meet housing demand. Once the changes come into play, many people will lose the option of renting privately, and the number of people who are homeless or in temporary accommodation will increase. In central London, the median rent for a four-bedroom property is £1,000 a week, more than three times more than the median for Oxford, for example. The new national cap means that some tenants could have to make up £600 extra each week – which most of us, I suspect, would consider to be an unlikely prospect for a family on a low income. One argument for the reduction is that the market will be forced to accept lower rents. In areas of low demand, this may be partially successful. But where there is a thriving rental market, it will mean that people already living there could have to leave their homes because they can't afford the rent. London Councils has just completed a survey of private landlords in the capital. Around 60% said they would not be prepared to lower rent if the tenant could not afford to pay due to the changes in benefit. So why shouldn't people have to move to cheaper areas if they can't afford to live in more expensive ones? Well, in London, for example, those areas where rent is cheaper are not equipped for such an influx of people. Further strains on public services, such as schools, will be felt acutely, and there is the personal cost to households themselves – the loss of support groups, close family networks and interrupted education. London Councils' view is that the very high rents should be limited by adopting a London rather than a national cap. Boroughs should be able to refuse to pay excessive housing benefit based on the LHA rate in their areas if a landlord fixes the rent at an unreasonably high level. We also want the government to increase the discretionary housing benefit payment (DHP) pot by more than £10m in 2011/12, to enable councils to help those most in need. This will still not be enough to keep all of these families in their homes, but will at least go some way towards managing the process and the transition.

Title

Plugged In

SUBSCRIBE TO CONTINUE READING