Investment in housing benefit could prevent thousands from homelessness

A report released today from Crisis has indicated that investment in housing benefit would prevent thousands from becoming homeless.

The organisation believes that restoring the levels of housing benefit, otherwise known as Local Housing Allowance (LHA), could make a colossal difference to levels of homelessness.

The report has revealed that housing benefit holds the potential to prevent over 6,000 households from being made homeless if the benefit successfully and comprehensively covered the costs of market rents. Housing benefit could also remove over 35,000 children in Britain from poverty within the next three years.

The research, conducted by Alma Economics, outlines the three-year cost and benefit analysis of a government investment of £3.3 billion in LHA for immediate net benefits of £2.

Crisis believes that removing the benefits freeze and investing in LHA would help thousands of people on the brink of homelessness by covering the costs of the cheapest 30% of market rents.

Removing the freeze and investing in LHA would also help homeless people afford rented accommodation and reduce the number of people turning to their local councils for help. Such efforts would reduce the need for homelessness services and expensive temporary accommodation.

This investment would provide net benefits of £2.1bn over the three years and this would allow the Government time to build a sufficient supply of affordable housing, whilst preventing the rise of homelessness in Britain.

LHA is the housing benefit aspect of Universal Credit which provides support to those on low incomes who cannot meet the cost of private rent. LHA rates were originally set to ensure the recipient could afford the cheapest third of properties in their area, meaning most were able to access a safe and stable home to build their lives in.

However, a series of cuts to LHA over the years, including a four-year freeze from 2016, has led to rates failing to keep up with the cost of rents in most areas places. This has meant that safe, affordable housing is becoming increasingly difficult to find.

This has ensured that many families and individuals have accumulated debt to make up for their lack of funds between their LHA and rent. The subsequent financial pressure has meant many are easily forced out of their homes and into homelessness.

Crisis is now calling on the Government to commit to restoring the LHA rates so that they cover the real cost of rent.

Jon Sparkes, chief executive of Crisis, said: “Everyone in our society should have the means to rent a safe, stable home where they can build their lives. But every day at Crisis, we hear of the agonising stress and anxiety people face, unable to afford their rent and keep the roof over their head.

“Right now, people are losing their homes and being left trapped in homelessness, unable to get back into adequate housing. We have to stop this happening. The UK Government has made commitments to end rough sleeping and reduce homelessness, but without addressing the root causes behind homelessness, it will sadly continue to rise.”

He added: “Long-term solutions like building more affordable social homes will take time so in the meantime, investing in LHA, so it covers the true cost of rents, provides the quickest and most effective opportunity to help those already homeless back into housing and for thousands more, prevent it from happening in the first place.

“Over the coming weeks, we urge the Government to prioritise investment in Local Housing Allowance as part of its upcoming spending decisions – this research makes a clear-cut case that doing so will have an immediate financial and human impact. Ending homelessness for good is truly within our capabilities but will only be made possible by taking steps like this.”

Terrie Alafat CBE, chief executive of the Chartered Institute of Housing, said: “The Chartered Institute of Housing is pleased to join Crisis and so many other organisations in calling on the government to restore local housing allowance to cover the most affordable 30% of rents.

“It is a national shame that thousands of families face being made homeless and councils are spending £1 billion a year on temporary accommodation because LHA is failing to do its job. Addressing this issue will bring the government significant savings in the benefit bill, as well as giving some of our most vulnerable fellow-citizens a more secure environment in which to live.”

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