This report examines the impact of cumulative underinvestment in Local Housing Allowance rates on homelessness. It considers the impact on households having to manage to make up the shortfall between their rent and Local Housing Allowance rates, and on the ability of councils to prevent and relieve homelessness.

Key findings

• The private rented sector is increasingly becoming an unviable options for resolving homelessness. The loss of a private rented tenancy is one of the most common ways people become homeless; in England it has been the leading cause of homelessness for six years.
• Local Housing Allowance, which forms part of a household’s Universal Credit payment, was originally created to provide support to help people on low incomes to pay their rent when they needed it. However, underinvestment in the rates, including a four-year freeze since 2016, has meant the rates fall far short of supporting people to afford the cheapest rents.
• Research carried out by Crisis and the Chartered Institute of Housing has shown that underinvestment in Local Housing Allowance rates means that in 92 per cent of areas in Great Britain, just one-fifth or less of the private rented sector is affordable within the rates to either single people, couples, or small families. By nation, this is 97 per cent of areas in England, 82 per cent in Wales, and 67 per cent in Scotland.
• The rates are also acting as a barrier to relieve homelessness. Without sufficient social housing in many parts of the country, councils rely on the private rented sector to fulfil their statutory duties to prevent and relieve homelessness. However, in many places, due to reduced expenditure on Local Housing Allowance rates, councils struggle to prevent people from becoming homeless from the private rented sector or to rehouse people in a privately rented home. This results in increased expenditure on temporary accommodation.

Reference

Basran, J. (2019) Cover the Cost: How gaps in Local Housing Allowance are impacting homelessness. London: Crisis.