Thousands of east London residents receiving housing benefit could be forced to choose between cutting food and transport bills to pay rent or leaving their homes in search of cheaper accommodation, research suggests.
Findings by the Chartered Institute of Housing published this week show that cuts in Local Housing Allowance will mean that, for the first time in the UK, there will be more people on benefits searching for affordable homes than the market currently provides.
For inner East London, which covers the boroughs of Hackney and Tower Hamlets, a family renting a two bedroom flat could experience a £30 cut in weekly LHA, receiving a maximum of £280 per week. Housing benefit for all four bedroom properties will be capped at £400 per week. Previously tenants in the two boroughs could receive up to £465 per week from their council for a four bedroom property.
In Hackney around ten per cent of all households in the private rented sector receive housing benefit. EastLondonLines’ research shows that rents start at £220 in Upper Clapton but can reach £250 in Hackney Central for a one bedroom flat. Rent for a four bedroom family home start at £450 in Lower Clapton but in Hackney Central the lowest figure was £550. This would force a family in this area to find an extra £85 a week.
Leslie Morphy of homeless charity Crisis said: “The figures make clear that there will just not be enough properties anywhere that are affordable on these reduced benefit levels. With unemployment rising and more people relying on housing benefit, yet soaring demand for properties, the government’s plans just don’t add up – we urge them to stop and reconsider.”
The Department for Work and Pensions said: “For the vast majority of areas except the most expensive parts of inner and central London, at least 30% of all private rental properties will be affordable. Our measures will place a lid on spiralling rents and local authorities will continue to work with tenants and landlords to negotiate down rents, which will in turn help to keep properties within reach.”
The government’s cuts in housing benefit have come into effect early this month, which means that private tenants relying on housing benefits will now only able to rent out properties with rents in the bottom third of the housing market, whereas previously the government would cover rents of properties in the bottom half of a given rental market area.
In addition to the cuts, from 2013 LHA will be up rated using the Consumer Price Index (CPI), which does not take into consideration housing costs. With rents rising, partly as a result of the Olympics coming to east London, benefits are almost certainly to decrease vis-à-vis rents, putting people reliant on state support further under financial pressure.
The CIH expects that the changes will force people to move to other areas where there will be increased pressure on affordable homes. Even where there are a sufficient number of affordable properties, benefit claimants face competition from others looking to live cheaply, such as students.
The LHA currently supports over a million households living in the private rented sector nationally. In Hackney, 2,050 homes are currently at risk of repossession, while the figure for Tower Hamlets is 1,535. Both boroughs have over 20,000 households on the council’s waiting list for affordable accommodation.