ROOF Blog

Charities are urging the government to do more to help tenants, claiming 1.3 million low income households are struggling with their finances.

Shelter and the Money Advice Trust said 90 per cent of households earning under £20,000 (£25,000 in London) are in financial trouble, compared to 56 per cent in 2006.

They want the government to address affordability in the private rented sector and offer advice and support. Nearly 50 per cent of those in trouble had not received advice in the last year.

According to the survey carried out by the two charities, four out of 10 people on low incomes said their debts were impacting on their health – rising to 50 per cent among households with children.

It also found 60 per cent of households in receipt of housing benefits or local housing allowance received less than the cost of their rent.

Shelter director of policy and campaigns, Kay Boycott, said many tenants at the lower end of the private rented sector faced a ‘daily battle’ to ‘keep their heads above water’.

‘The government must recognise the significant role the private rented sector is playing in bearing the brunt of this recession by increasing funding for advice and support services, and setting out a long-term vision for the sector,’ she said.

Tenants who receive local housing allowance (LHA) will be able to choose to have their rent money paid directly to their landlord if the Conservatives win next year’s general election. Grant Shapps, shadow housing minister, will announce today at the Crisis national conference in Birmingham that a Conservative government will revert to the way housing benefits were handled before last year’s government reforms, which are due to be reviewed before April 2010. Shapps is expected to say that the current system is deterring landlords from renting property to tenants receiving LHA: ‘Fearful that rent money may never be paid, some landlords routinely include the words ‘No HB’ in their ads, further restricting the supply of housing for affordable rent.’

Vulnerable tenants are falling into rent arrears, having their tenancies cancelled and facing homelessness because of the local housing allowance, Crisis found in a survey of private rented sector access schemes. The move to make payments direct to tenants has meant the most vulnerable find it harder to obtain suitable properties and more are having their tenancies terminated. The survey comes a year after the LHA was introduced.

The government has decided to push ahead with its housing benefit reforms despite advisers fearing they will discriminate against thousands of families and black and minority ethnic households. The changes will cap from next month the amount of local housing allowance payable for homes of six or more bedrooms, at the five-bedroom rate. A Work and Pensions advisory committee had strongly urged the government not to proceed with the change, saying up to 5,000 families could lose out as a result – of which 3,000 have children and live below the poverty line, and at least 40 per cent were from non-white communities.

Housing minister Margaret Beckett announced new support to help councils cut their planned rent increases. Guideline rent increases for 2009/10 were set out in September when inflation was at 6.2 per cent, however, Ms Beckett confirmed that this will be halved for local authority tenants to encourage councils to reduce the amount tenants would have to pay. She added that government would make funding available to support local authorities to make the changes.

The government’s new housing benefit system is creating poverty traps in the outer north eastern boroughs of London, research by Shelter found. The local housing allowance (LHA), which is replacing the housing benefit in the private rented sector will leave many tenants with a significant shortfall in rent, which they will either have to find themselves, or move into poorer areas where the benefit will cover their costs. The research also found that a majority of landlords are unwilling to let properties to LHA claimants in areas they can afford. Full details in the March/April issue of ROOF, out next week.

The government has changed the definition of the rental areas used to set housing benefit levels and sidestepped a House of Lord’s decision that would have forced it to redraw boundaries. The Department for Work and Pensions pushed through changes in rental areas, despite a Lord’s judgment that the areas covered were too large. The DWP argued that the judgment would disadvantage tenants in some areas by pushing down their housing benefit.

Reforms to housing benefits would push claimants into ghettos as tenants are forced to move to areas where housing is cheap but jobs scarce, Shelter warned. The local housing allowance (LHA), which replaces housing benefit, is not enough to cover private sector rent for many tenants and those who lose out will need to meet the shortfall themselves or move to cheaper areas.