Renters left out in the cold

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ViewsMarch 22nd, 2022

Ahead of the publication of the Bevan Foundation’s new report on Wales’ housing crisis, Hugh Kocan explores how rent is an overlooked element of the cost-of-living crisis.

Across Wales and the wider United Kingdom, thousands of households are struggling to cope with the growing cost of living. One cost that has been overlooked as part of the discussion on rising living costs are rents.

Rent constitutes one of the largest expenditures faced by households. In 2020 households on the lowest incomes spent a staggering 38% of their income on rent. With rents on the rise the need to revisit the assistance provided to low-income renters through the social security system has never been greater.

Cutting back as rents rise

Despite thousands of low-income renters struggling to pay their rents the amount of support provided to renters through the social security system is set to be cut. Local Housing Allowance (LHA) rates have been frozen since 2021, with the freeze set to continue until 2023 at least. The Discretionary Housing Payment budget, on the other hand, is set to be cut from £140m to £100m.

These decisions matter. Between 2016 and 2020 the UK Government froze LHA rates. This freeze is widely acknowledged to have led to a growth in the gap between the LHA and rents. This gap has been identified as both a cause of homelessness and significant financial hardship.

The decision to cut Discretionary Housing Payments (DHPs) at the same time is set to exacerbate these challenges. DHPs are discretionary payments made to people who are in receipt of benefits to assist them with any financial difficulties they are facing due to housing costs. DHPs are administered by local authorities and have been used extensively to help households left short by the social security system. 

The decision to cut DHPs will limit the ability of local authorities to provide vital assistance. Without this support many more households are set to be at risk of homelessness and financial hardship.

The need for action

With the cost-of-living crisis set to become even more significant over the next few weeks and months the UK Government should reverse its decision to cut the DHP budget and freeze LHA. Research conducted by the Bevan Foundation has highlighted the central role that the LHA plays in creating housing insecurity. With reduced financial support households will find themselves stuck between a rock and a hard place – unable to afford rent in their current accommodation, and unable to move into cheaper accommodation.

There is a need to look more broadly at the housing system, however, if we are to find long term solutions. The Bevan Foundation have been working to understand the issues faced by households on low incomes living in the private rental sector. On March the 23rd we will publish a new report outlining our findings and sharing our ideas about how the present challenges can be overcome. Join us for our launch event this Wednesday here, and keep an eye on our website for a copy of the report.

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