Refugees and the need to reform the Local Housing Allowance

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ViewsSeptember 30th, 2021

Our Housing Policy Officer, Hugh Kocan, looks at how the Local Housing Allowance may impact refugees leaving Afghanistan for the UK

The ongoing humanitarian crisis in Afghanistan, and the recent scenes of refugees fleeing the country have truly been shocking. Such a crisis requires swift action to provide safety to refugees, and we welcome the progress the UK have been making in assisting refugees fleeing Afghanistan.

On the front of it, the UK Government, alongside the Welsh Government and local authorities, are working hard to provide support to refuges through the Afghan Citizens’ Resettlement Scheme (ACRS). On closer examination, however, serious questions emerge regarding the provision of housing through the scheme. As part of the UK Government’s resettlement scheme, local authorities will be housing refugees in the private rental sector with their rent covered by Housing Benefit. There are concerns, however, that this support will not be sufficient in providing refugees with adequate accommodation.

If a tenant in the private sector is claiming Housing Benefit or the housing element of Universal Credit, the support they are provided is determined by the Local Housing Allowance (LHA). The LHA determines the amount of support a person or family receives and differs depending on the area and the number of bedrooms they are entitled to. The LHA is designed to provide enough support for a renter to afford accommodation at the 30th percentile of a market, i.e. the cheapest thirty percent of homes in a given area.

However, research published by the Bevan Foundation reveals that for someone searching the market for accommodation today, their options would be far below 30%. We collected data over the summer on rental prices as advertised on the market in ten different local authority areas. Our findings indicate that whilst the LHA should be set a level that covers rent in full at the bottom 30% of the market, it only covered the rent of 4.8% of accommodation advertised on the market this summer.

What does this mean for refugees?

Due to these limitations local authorities may find it hard to help refugees find a permeant home. As local authorities are rehousing refugees in the private rental sector, they must work alongside landlords in the rehousing process. There are concerns that if LHA rates are not sufficient, landlords who would otherwise be open to letting out their properties to refugees will refuse to do so. For example, Exeter local authority noted that they are receiving a good deal of interest from landlords happy to accommodate refugees, but the majority are asking for rent above the LHA rates.

This creates a conundrum for local authorities tasked with rehousing refugees as they will likely lack the available housing needed to rehouse everyone in need of support. Stephen Robinson, the Liberal Democrat leader of Chelmsford city council, as quoted in the Guardian, reiterated this point by saying “We would like to do more but the fundamental problem is the government’s comprehensive failure on the housing system.”

We are already seeing the consequences of the weaknesses with the LHA system, with news stories from Exeter, Kent, and York highlighting the issues local authorities are a facing in relocating families, and how the LHA creates a barrier.

Hundreds of refugees are now being put into temporary accommodation, and with local authorities struggling to find suitable housing, there are fears that these families could be stuck in hotels and B&B’s for months on end.

What can be done about it?

Of course, this is a problem that is not just limited to refugees. Thousands of people across Wales receive support through Housing Benefit or the housing element of Universal Credit as determined by the LHA. Many are faced with a choice of moving into accommodation that they struggle to afford, moving into low quality housing or risk homelessness.

The obvious solution would be to raise the LHA back to the 30th percentile. As it stands, there is a large gap between rents on the market, and the LHA rates. Part of this is due to the UK Government’s decision to freeze the rate of LHA for the 2021/22 financial period. If the LHA is uplifted, the option to rent to people in receipt of Housing Benefit or the housing element of Universal Credit would become more lucrative for landlords, and likely result in local authorities having greater options for housing refugees.

But there is more that can be improved upon. Our research indicated that there were improvements that could be made to the method of calculating the LHA which would make it more representative of market trends, and thus ensure that people obtain the full level of support they require. As it stands, the LHA is based on rent prices of homes that are already being let out and not homes as they come onto the market. Therefore, it is slow to respond to trends within a market. Amending this would likely produce more accurate LHA rates, thus providing sufficient levels of support for refugees.

While there are brilliant levels of ambition and determination to help refugees find a new life in the UK, ultimately without a housing system that is fit for purpose, we will be failing them. This experience is nothing new either, with thousands of Welsh renters already struggling as a consequence of the LHA. Now must be the time to ensure that the LHA is fit for purpose before it fails the next generation.

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