London Councils has welcomed new research highlighting the economic benefits of restoring Local Housing Allowance (LHA) levels to cover rents and reduce homelessness.
The research, which was conducted by Alma Economics on behalf of the charity Crisis, suggests restoring LHA so that the benefit covers the cost of the cheapest 30% of market rents. The analysis estimates that this would prevent more than 6,000 households becoming homeless, lift 35,000 children out of poverty, and secure a net economic benefit of £2.1 billion over three years.
London Councils warned in July that the government’s policy of freezing LHA levels was significantly reducing the number of homes affordable to the 200,000 low-income London households receiving the benefit. Analysis showed only between 0 and 15% of private sector rents across the capital were affordable on LHA rates and almost half of London claimants did not receive enough housing benefit to cover their rent.
Cllr Muhammed Butt, London Councils’ Executive member for welfare, empowerment and inclusion, said:
“The LHA freeze is a counterproductive policy that is driving up homelessness rates in the capital.
“This research is the latest evidence of why the government should restore LHA levels to cover at least 30% of local private sector rents, as this would improve accommodation options for low-income Londoners and ease the pressure on household finances.
“Restoring LHA levels is the most effective short-term measure for boosting our efforts to tackle homelessness in London. The government must take action.”
People who are 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.
With a chronic shortage of social housing in the capital, many low-income Londoners depend on finding accommodation in London’s private rented sector. However, the government has introduced a series of changes to LHA since 2011, including a four-year freeze on LHA rates from April 2016, which has severely restricted the pool of properties affordable to London households who use the benefit to pay their rent.
London Councils is calling on the government to restore LHA levels so that claimants can afford at least the lowest 30% of local market rents. Boroughs believe this would help prevent homelessness for thousands of Londoners, while reducing the wider costs to the public sector that homelessness creates.