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London: nowhere to rent if you are young and on benefits London: nowhere to rent if you are young and on benefits
(4 months later)
If you are young, on benefits, and living in London, finding somewhere affordable to live is now all but impossible.If you are young, on benefits, and living in London, finding somewhere affordable to live is now all but impossible.
Housing benefit reforms mean that the chances of a young single person on benefits - and "young" means up to the age of 35 - finding a room to rent in a shared house or flat in the capital now range from dismal to non-existent, according to new research.Housing benefit reforms mean that the chances of a young single person on benefits - and "young" means up to the age of 35 - finding a room to rent in a shared house or flat in the capital now range from dismal to non-existent, according to new research.
The reforms are underpinned by the idea that a third of all shared rooms in a given area should be affordable to young people on benefits. In reality, just 5.5% of 56,000 private rented properties in London listed on the Right Move website were affordable to this group, according to a study by the charity Homeless Link.The reforms are underpinned by the idea that a third of all shared rooms in a given area should be affordable to young people on benefits. In reality, just 5.5% of 56,000 private rented properties in London listed on the Right Move website were affordable to this group, according to a study by the charity Homeless Link.
In inner London just 2.4% of properties searched on the Right Move website were affordable to youngsters on benefits, rising to 9.8% in outer boroughs. In Kensington and Chelsea this amounted to just one affordable property, and in Westminster 53.In inner London just 2.4% of properties searched on the Right Move website were affordable to youngsters on benefits, rising to 9.8% in outer boroughs. In Kensington and Chelsea this amounted to just one affordable property, and in Westminster 53.
So what, the argument goes, why should anyone who can't afford to live in these desirable bits of central London, be funded by the tax payer to live there?So what, the argument goes, why should anyone who can't afford to live in these desirable bits of central London, be funded by the tax payer to live there?
Well, it appears part of the reason why people on benefits rent in the private sector in these boroughs - and 40% of all people in receipt of local housing allowance (LHA) are in work, by the way - is because that is where the bulk of private rented properties are.Well, it appears part of the reason why people on benefits rent in the private sector in these boroughs - and 40% of all people in receipt of local housing allowance (LHA) are in work, by the way - is because that is where the bulk of private rented properties are.
That single affordable Kensington dwelling is sifted from 6,153 listed rented properties in the borough. In Westminster there are 8,729. Barking and Dagenham in the north east of the capital may be vastly cheaper - 54% of listed private rented homes may be classed as affordable to a young person on benefits - but that amounts to just 187 homes.That single affordable Kensington dwelling is sifted from 6,153 listed rented properties in the borough. In Westminster there are 8,729. Barking and Dagenham in the north east of the capital may be vastly cheaper - 54% of listed private rented homes may be classed as affordable to a young person on benefits - but that amounts to just 187 homes.
The thrust of welfare reform may be to spin claimants out to the suburbs, but it seems those areas do not seem to be vastly endowed with suitable places to rent, at least for young people who need a room in a shared house. There appears to be a chronic mismatch of supply and demand.The thrust of welfare reform may be to spin claimants out to the suburbs, but it seems those areas do not seem to be vastly endowed with suitable places to rent, at least for young people who need a room in a shared house. There appears to be a chronic mismatch of supply and demand.
How much a young single person can receive in housing benefit is governed by the Shared Accommodation Rate (SAR). The SAR rates effectively limit housing benefit payments to the equivalent of the rent for a room in a shared house in any given area. The coalition expanded SAR coverage to include 24-35 year olds (instead of, as previously, just 18-24 year olds) thereby adding 12,000 people (who under the old regime could have afforded a one bed flat) to the crowded shared house market.How much a young single person can receive in housing benefit is governed by the Shared Accommodation Rate (SAR). The SAR rates effectively limit housing benefit payments to the equivalent of the rent for a room in a shared house in any given area. The coalition expanded SAR coverage to include 24-35 year olds (instead of, as previously, just 18-24 year olds) thereby adding 12,000 people (who under the old regime could have afforded a one bed flat) to the crowded shared house market.
In addition it cut benefit rates from the 50th percentile of rents in each broader market rental area to the 30th percentile, shrinking the supply of affordable properties to rent. This meant that a claimant should be able to afford the cheapest 30% of properties in a given area. However, soaring private rents (up 37% in the past five years and predicted to rise by a further 29% in the next five, according to Homeless Link) mean that in only two London boroughs - Barking and Dagenham, and Bexley - would a young person claiming SAR find at least 30% of properties affordable.In addition it cut benefit rates from the 50th percentile of rents in each broader market rental area to the 30th percentile, shrinking the supply of affordable properties to rent. This meant that a claimant should be able to afford the cheapest 30% of properties in a given area. However, soaring private rents (up 37% in the past five years and predicted to rise by a further 29% in the next five, according to Homeless Link) mean that in only two London boroughs - Barking and Dagenham, and Bexley - would a young person claiming SAR find at least 30% of properties affordable.
As the research points out:As the research points out:
The overall impact of the benefit changes is that there are now more claimants looking to rent a room in shared accommodation, but there are fewer rooms that they can afford.
The overall impact of the benefit changes is that there are now more claimants looking to rent a room in shared accommodation, but there are fewer rooms that they can afford.
So will the market respond to ensure this group of young people (about 41,000 in London) find somewhere to live? Will landlords drop rents (as the government hopes), or expand the supply of potential homes by converting existing homes to make them suitable for multiple occupation?So will the market respond to ensure this group of young people (about 41,000 in London) find somewhere to live? Will landlords drop rents (as the government hopes), or expand the supply of potential homes by converting existing homes to make them suitable for multiple occupation?
A separate piece of research published this week, commissioned by the Department for Work and Pensions (DWP), suggests not. Landlords were asked about how they would respond to housing benefit reforms. Most said they had no intention of reducing rents, particularly in London where demand for private rented properties was high and increasing.A separate piece of research published this week, commissioned by the Department for Work and Pensions (DWP), suggests not. Landlords were asked about how they would respond to housing benefit reforms. Most said they had no intention of reducing rents, particularly in London where demand for private rented properties was high and increasing.
A number said they were going to abandon renting to LHA tenants altogether, as a matter of policy.A number said they were going to abandon renting to LHA tenants altogether, as a matter of policy.
On the SAR reforms in particular the response was even more stark:On the SAR reforms in particular the response was even more stark:
Many landlords said they had decided to cease renting to LHA tenants under the age of 35 because of the perceived lack of profitability in this market
Many landlords said they had decided to cease renting to LHA tenants under the age of 35 because of the perceived lack of profitability in this market
But it gets worse. Landlords, says the DWP research, were reluctant to undertake conversions to existing properties to accommodate young people needing shared accommodation, because of the perceived hassle. And here's a twist. Homeless Link's 5.5% affordability figure assumes that landlords would adapt their homes. If they didn't, then the SAR affordability pool for the whole of London shrinks to just 0.9%, or just 437 properties.But it gets worse. Landlords, says the DWP research, were reluctant to undertake conversions to existing properties to accommodate young people needing shared accommodation, because of the perceived hassle. And here's a twist. Homeless Link's 5.5% affordability figure assumes that landlords would adapt their homes. If they didn't, then the SAR affordability pool for the whole of London shrinks to just 0.9%, or just 437 properties.
The DWP report states:The DWP report states:
A common theme among in interviews with landlords... was the mismatch between the increased demand for shared accommodation brought about in part by the LHA changes, and the slow supply response.
A common theme among in interviews with landlords... was the mismatch between the increased demand for shared accommodation brought about in part by the LHA changes, and the slow supply response.
Homeless Link says that unless the SAR is adjusted to increase the number of affordable properties, the capital must brace itself for increasing homelessness among young single adults.Homeless Link says that unless the SAR is adjusted to increase the number of affordable properties, the capital must brace itself for increasing homelessness among young single adults.
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