Cuts to local housing allowance – early impact

Just over two-thirds of housing benefit claimants in the private rented sector (and 8 out of 10 new claimants) face a ‘shortfall’ between their local housing allowance (LHA) and their rent, according to new research.

Sheffield Hallam University researchers examined the initial reactions of tenants and landlords to cuts in LHAs introduced in April 2011. From that date rates were capped at £250 per week for a one-bedroom property, rising to £400 per week for four bedrooms or more. The five-bedroom rate was scrapped. In addition, from October 2011, LHAs were set at the 30th percentile of local rents rather than the median (average).

Key findings

  • Just over two-thirds of claimants had a ‘shortfall’, in the sense that their LHA was less than their rent. New claimants were more likely to have a shortfall than existing claimants. Shortfalls were less common in London.
  • People facing a shortfall had taken a range of actions in response – including economising on essential or non-essential items in their household budget, drawing on other benefits and borrowing money from family or friends.
  • Over two-fifths of people said they found it difficult to afford the rent charged for their current accommodation.
  • Nine out of ten claimants were up to date with the rent. Few claimants blamed arrears on a cut in their housing benefit.
  • Just 70 per cent of landlords said they would continue letting to tenants who claimed housing benefit.

Source: Christina Beatty, Ian Cole, Peter Kemp, Ben Marshall, Ryan Powell and Ian Wilson, Monitoring the Impact of Changes to the Local Housing Allowance System of Housing Benefit: Summary of Early Findings, Research Report 798, Department for Work and Pensions

Links: Report | Summary | Press release | Guardian report