Raise Local Housing Allowance to prevent 60,000 London renters from becoming homeless, November 2023

  • By Amy Leppänen

London Councils has published new analysis estimating that almost 60,000 Londoners living in the private rented sector are likely to become homeless over the next six years if the government maintains the freeze on the Local Housing Allowance (LHA). LHA goes to eligible households as part of their housing benefit or Universal Credit payment to cover housing costs if they rent privately.

London Councils is calling on the government to end the freeze on Local Housing Allowance in the Autumn Statement. We want to see LHA raised to cover at least 30% of local market rents, as this will have a significant impact on reducing homelessness.

London Councils commissioned independent research from Alma Economics which estimates that an additional 16,500 to 22,000 London households will become homeless by 2030 unless LHA is raised. 22,000 households is equivalent to approximately 58,740 individuals – including 28,000 children.

One in seven London private renters are reliant on LHA to meet their housing costs. However, only 2.3% of London listings on Rightmove in 2022-23 were affordable to those using the benefit to pay their rent – falling from 18.9% in 2020-21.

The new research also suggests that restoring LHA to cover at least 30% of local market rents would save the public finances in London up to £107 million per year. Most of these savings would come from reduced pressure on London boroughs’ homelessness services, but also from lower costs to other parts of the public sector such as the NHS and social care.

Amid worsening homelessness pressures in the capital, uprating LHA to cover at least the bottom 30% of rents is one of London Councils’ top priorities in its submission to the government’s upcoming Autumn Statement. London accounts for more than half (57%) of England’s total number of homeless households in temporary accommodation. London Councils’ most recent figures show that almost 170,000 Londoners are currently homeless and living in temporary accommodation arranged by their local authority – equivalent to around one in 50 Londoners overall and one in 23 children in the capital.

This situation is increasingly unmanageable for London boroughs which are collectively set to overspend their homelessness budgets by £90 million this year. A critical factor behind the growing numbers of homeless Londoners is turbulence in the capital’s private rented sector. Separate research commissioned by London Councils and partners, published in July, revealed a 41% drop in private rental listings in the capital since 2020, with a corresponding 20% increase in listed rental prices.

Amy Leppänen, Parliamentary Officer