End The LHA Freeze!

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A new report from Shelter says the Local Housing Allowance (LHA) freeze should not only end next year as planned but have rates restored to at least the so-called 30th percentile – or cheapest third of local rents.

The report From the frontline – Universal Credit and the broken housing safety net also wants a “ robust mechanism” in place to keep LHA rates in line with at least the 30th percentile of local rents, regardless of fluctuations in private rents. In the interim, the report says during this final year of the freeze, additional Targeted Affordability Funding (TAF) must be made available and changes must be made to the way it is administered to ensure those most at risk of homelessness this year receive adequate amounts.

The process of applying for an alternative payment arrangement (APA) should be made as easy and affordable as possible and not be seen as an emergency remedy for those already in arrears and struggling, but as a viable and preventative measure for those who wish to proactively manage their money to avoid arrears, the report says. Nor, it says, should the process of migration from the previous benefit system onto Universal Credit (UC) leave no one at risk of homelessness.

Shelter’s research reinforced the problems service users experience with UC as caused by a combination of the inadequate LHA rates that underpin the housing element for those renting privately and in the design of the programme itself – with the programme unable to function as intended without tackling both. If the design issues such as the five-week wait are resolved, claimants will still experience shortfalls between their housing element and their private rent on an on-going basis, the research found.

Equally, if LHA rates are brought back up to the 30th percentile, the five-week wait and difficulties in gaining an alternative payment arrangement will continue to push families into hardship, rent arrears, and homelessness. “Problems with UC are now becoming urgent. If action is not taken soon, the programme risks pushing many more households into debt and homelessness throughout its rollout, the migration processes, and beyond,” the report says.

And councils already spending just under £1bn on temporary accommodation in 2017-18 are likely to see these costs continue to rise if action is not taken.

Nothing emanating out of Westminster or Whitehall on the Spending Review suggests there’s anything of substance in it for housing – and there are fears the Johnson government is frosty toward thawing of the LHA freeze. The Shelter report says if those claiming the housing element of UC or housing benefit are only able to access the bottom 10% of their local market, their housing options are severely restricted and many simply won’t find anything they can afford on the market when they need it, putting them at risk of homelessness.

Exacerbating this is the widespread reluctance of landlords to let to those on housing benefit: 43% of private landlords operate an outright bar on households claiming housing benefit and a further 18% say they prefer not to let to this group. Because LHA covers so little of the market, if a claimant were to find a landlord willing to let to them, it is likely they will have a shortfall between their LHA and their renting costs. In 2016/17, 65% of non-working claimant households in England had a shortfall.

The report makes a number of recommendations:

  • In the 2019 Spending Review, the LHA freeze must come to an end, as planned, by April 2020 and the rates restored to at least the 30th percentile
  • Going forward, there needs to be a robust mechanism to keep LHA rates in line with at least the 30th percentile of local rents, regardless of fluctuations in private rents
  • In the interim, during this final year of the freeze, additional TAF must be made available and changes made to the way it is administered to ensure those most at risk of homelessness this year receive adequate amounts
  • Applying for or moving to UC should not leave anyone at risk of homelessness, and the system should be urgently reviewed to ensure it does not
  • The five-week wait at the start of a UC claim should be removed completely or, at the very least,  it should be mitigated against by ensuring that the advance payments are easily available and are offered as a grant rather than a loan
  • The process of applying for an APA should be made as easy and affordable as possible
  • The process of migration from the previous (legacy) benefit system onto UC should leave no one at risk of homelessness

The full report is available to download at www.shelter.org.uk