Only 5% of privately rented properties in the UK are affordable to those on housing benefits, according to the Institute for Fiscal Studies.
(Bloomberg) — Only 5% of privately rented properties in the UK are affordable to those on housing benefits, according to the Institute for Fiscal Studies.
That’s a significant drop since the start of the pandemic, when 23% of new lets advertised on property website Zoopla could be rented solely using government housing support, the IFS said in a report published Tuesday.
The findings pile pressure on Prime Minister Rishi Sunak’s government to end a three-year freeze on Local Housing Allowance rates, which determine the maximum a family can get toward their private rent costs.
With rents rising by around a fifth in the same period, the freeze is inflicting further pain on low-income households already struggling with a sharp increase in food and energy costs. The LHA rate has been capped at 30% of average local rent in September 2019.
A housing crisis is brewing in Britain as millions of people are forced to re-negotiate expiring fixed-rate mortgages at significantly higher costs as the Bank of England raises interest rates in its battle to tame inflation. Landlords are hiking rents to cover the extra costs.
The little affordable housing left on the market is more likely to be of poor quality, the IFS said. Below average energy ratings and higher water and heating costs further erode the disposable income of those finding it hard to get by.
According to the report, a quarter of the private homes rented by people on a low income would fail the Decent Homes Standards, the legal minimum requirements for social housing.
“The properties that are covered by benefit rates are of lower quality and more expensive to heat than the average,” said Tom Wernham, a research economist at the IFS. “If these benefit freezes are maintained, private rents will become increasingly unaffordable for those on low incomes.”
Darren Baxter, principal policy adviser at the Joseph Rowntree Foundation, which funded the research, said: “As more people on low incomes rent privately, it’s crucial that the government unfreezes LHA and ensures it reflects market rents so that families aren’t forced to choose between homes that are unsafe or homes they can afford.”
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