3Factors in the increase in homelessness
13.Homelessness is not caused by any one single issue, and tackling it therefore requires a multi-faceted approach. There are however observable trends in the causes of homelessness that should be recognised and addressed. The causes of homelessness can be roughly divided into those that are structural or societal, and those that are personal or individual. Both may contribute in individual cases as personal problems can often be exacerbated by the structural challenges of the housing system. Jon Sparkes from Crisis argued:
The structural reasons are around not being able to afford a property to live in, for whatever reason: the price of the property, level and reliability of income, and level of benefits versus rental on properties, so big structural reasons. Then there are the personal reasons that we are probably more familiar with, such as relationship breakdown, addiction and mental health issues, and then the very predictable reasons for people who leave the care system or who leave the prison system. There are probably some typical groups there, but they merge in to each other a lot.13
The private rented sector
14.The ending of an Assured Shorthold Tenancy (AST) can be a major cause of homelessness. An AST is the default legal category of residential tenancy in the private rented sector in England. Most tenancies have an initial fixed term of six or twelve months, with the landlord able to choose whether or not they are renewed at the end of the fixed term. Landlords are also able to evict tenants by issuing a Section 21 ‘no fault’ possession notice, which may require tenants to vacate the property at short notice (two months). DCLG note that “In 2015, 30% of households accepted by local authorities as owed the main homelessness duty reported that the reason for their homelessness was the loss of an AST. This compares to 13% ten years earlier".14 In many areas of the country, rents are increasing far faster than tenants’ ability to pay. Kate Webb from Shelter described how it had changed:
[The numbers of homeless people who were previously in private rented accommodation have seen] a 250% increase over the past five years. For statutory homeless … it always used to be things like relationship breakdown or friends and family not being able to provide accommodation for someone. Overwhelmingly over the past five years, it has become the very prosaic issue of someone losing a tenancy in the private rented sector and simply being unable to find anything else that is affordable.15
15.The housing lawyer Giles Peaker added that “An increasing proportion of our clients seem to be employed, part-time, possibly low waged, but have ended up losing a private sector tenancy. It is often a rent increase, and that is it”.16
16.We hosted a screening of the film ‘Half Way’ and took evidence from its director Daisy-May Hudson. The film tells the story of the Hudson family who lost their home of thirteen years when their landlord terminated the tenancy. Ms Hudson explained:
My mum, my sister and I were privately renting for 13 years, and our landlord was Tesco. Because they were not really interested in raising the prices with inflation, our rent remained relatively stable. After 13 years we got a letter to say that Tesco were selling off their assets. At that time, when we tried to look for suitable accommodation in the area that was affordable for my mum—she was working but we were a single-parent family—there was nothing that was in our price range, and so at that point we had no option but to declare ourselves homeless to the council.17
17.Local Housing Allowance (LHA) is a flat rate level of housing benefit payable to claimants living in the private rented sector. LHA rates are based on the 30th percentile of markets rents within a Broad Market Rental Area for different bedroom sizes – it is also subject to national caps. LHA is means-tested; a claimant’s personal entitlement will depend on their individual circumstances. Many witnesses pointed to the disparity between LHA rates and the actual rents charged by landlords. South Cambridgeshire District Council for example highlighted that “A significant barrier to accessing the private rented sector is the difference between LHA rates and typical rent levels. Typically rents are at least £250pcm more than the LHA rates across all property sizes, making the private rented sector unaffordable for those on a low income.”18 Westminster City Council has the largest private rented sector in England with very high rents, and there is a £536.54 disparity between the average weekly rent of a three bedroom home and the capped LHA rate.19 The comparative rents and LHA levels in Brighton & Hove are shown below.
Table 1: Brighton & Hove monthly average private sector rents and LHA levels
|
Property type |
Average monthly rent |
Local Housing Allowance level |
Difference |
|
1 bedroom flat |
£912 |
£663 |
£249 |
|
2 bedroom flat |
£1,264 |
£834 |
£430 |
|
2 bedroom house |
£1,294 |
£834 |
£460 |
|
3 bedroom house |
£1,534 |
£998 |
£536 |
|
4 bedroom house |
£1,976 |
£1,471 |
£505 |
Source: Brighton & Hove Council (HOL36)
18.In the Summer Budget 2015 the Government announced that working-age benefits, including the LHA, would be frozen for four years.20 This is likely to exacerbate the gaps between LHA rates and rents charged. Bristol City Council pointed out that while LHA rates will be frozen for four years, average rents in the city continue to rise, with an 18 per cent increase in 2015 alone21 (Rightmove put the increase figure at 9.2 per cent for 2015.)22
19.The private rented sector is often the only viable option for tenants who do not qualify as priority need. However it is clear that access to stable accommodation in the private rented sector has become unaffordable for many people. Kate Webb from Shelter told us:
We did a very revealing piece of work at the tail-end of last year where we spoke to teachers in London schools. They were saying to us that five or 10 years ago they felt that they had a good sense of who in their classes would be homeless, but now it is impossible to predict; it is people with stable but low-paid jobs, and they are now in the situation where they cannot assume that the children they are teaching have a bed to sleep in. That has become commonplace for many people on low incomes.23
20.The cost of the private rented sector is not the only challenge. Reports suggest that many landlords are unwilling to let properties to tenants in receipt of housing benefit, and even fewer to those who are homeless. A report by Crisis, Home: No less will do, found that only 45 per cent of landlords were willing to let to tenants in receipt of housing benefit, and 18 per cent to homeless households. Of those who were willing to let to homeless households, 75 per cent were currently letting less than 10 per cent of their stock to homeless people and 27 per cent said that they were letting fewer properties to homeless people than they had two years previously.24
21.In light of the shortage of social housing (discussed further below), the private rented sector is an essential means to help people escape and avoid homelessness. However for many the financial barriers and instability of tenancies are too great. The Government should explore measures to give greater confidence both to tenants and to landlords to encourage them to let to homeless people. Local Housing Allowances levels should also be reviewed so that they more closely reflect market rents. Landlords should be encouraged to offer longer Assured Shorthold Tenancies which allow tenants to leave early without penalty.
Availability of social housing
22.The challenges of the private rented sector are exacerbated by a shortage of social housing. In 2013 the charity Centrepoint commissioned a study from Cambridge University which found that by 2021, at current rates of construction, there could be a shortfall of submarket rent homes (council housing, housing association properties, private rented sector units available at the rate of local housing allowance) of over 900,000.25 Shelter pointed out that the total number of social homes in England has fallen by 26 per cent since 1979 (from 5,540,000 to 4,076,000). The charity argues that England requires at least 250,000 homes to be built a year, and that 30 per cent of these need to be low-rent homes.26
23.In the 2015 Spending Review, the Government announced a plan for 400,000 affordable housing starts by 2020/21, with a strong emphasis on home ownership. This will include 200,000 Starter Homes, 135,000 Shared Ownership properties, 10,000 homes that will allow a tenant to save for a deposit while they rent and at least 8,000 homes for older people and people with disabilities.27 The Spending Review did not include any funding for the building of new homes for social rent. The Housing and Planning Act 2016 places a duty on local authorities to promote the supply of Starter Homes.28 Howard Sinclair from the charity St Mungo’s told us:
The dialogue is about affordable housing. The people who end up homeless and on the streets cannot afford affordable housing. There has to be a commitment to social housing where it is needed, and that has completely dropped off the discussion across all political parties. Yes, a supply of housing will inevitably trickle through, but that will take years and years. In London and Bristol … there is no social housing to rent.29
24.We reiterate our conclusions from our report earlier this year on housing associations and the Right to Buy.30 We note that there is a clear demand for low cost home ownership which is answered in part by Starter Homes but not all people are in a position to afford this step. There is therefore a case for the development of homes for affordable rent which we encourage the Government to act on by working with local authorities to deliver the homes that are needed at a local level.
25.Witnesses from local authorities described the gap between demand and supply. Hazel Summers from Manchester City Council told us that the city has a high number of single homeless and rough sleeping people so one-bedroom properties are in particular demand: “This week there are 22 general needs one-bedroom flats available and there are 4,616 people who are waiting for that flat who have a housing need of some kind”.31 Cllr Daniel Astaire stated that Westminster City Council currently has a 25 year waiting list for four-bedroom properties.32
26.We have also received evidence that suggests that the availability of social housing for homeless people and those at risk of homelessness has been further limited by an operating environment that encourages housing associations to become increasingly commercial. According to SHORE (Sussex Homeless Outreach Reconnection & Engagement), housing associations have had to become more risk averse:
financial pressures are leading to social landlords becoming more selective over which tenants they take on, threatening an increasingly large number of people on lower incomes with homelessness. For rough sleepers with multiple and complex needs, reductions in social housing reduces their housing options close to zero.33
27.Nick Hooper from Bristol City Council supported this view:
We are aware that housing associations and RPs are becoming understandably more concerned about risk and, therefore, it is more difficult to persuade them to take some sorts of households… Housing associations are increasingly looking for economically active households and particularly people who are going to pay their rent and so forth. It is an emerging significant issue.34
28.We asked Daisy-May Hudson, Ross Symonds and Mateasa Grant, who had all previously been homeless, what one thing the Government could do to improve levels of homelessness. They all said that building more social housing was essential.35
29.Affordable social housing is of fundamental importance in tackling homelessness. We support the Government’s aspirations for home ownership, but many people simply cannot afford to buy a home, even with the support mechanisms introduced. We remain concerned that the priority given to Starter Homes is likely to reduce the number of homes available for rent at affordable levels. We also note that the term ‘affordable housing’ has become contentious and open to interpretation. We therefore reiterate our finding from our earlier report and note that the increasing levels of homelessness since its publication further underlines the importance of affordable rented housing being available.36 We recognise the need to develop Starter Homes to meet the demand for low cost home ownership but recognise the need for appropriate new homes for affordable rent. The Government should therefore review the definition of affordable housing to reflect local needs.
Changes to the welfare system
30.Since 2010 there has been significant reform of the welfare system reducing the level of support for low income households and those at risk of homelessness. In the Summer Budget 2015, the Government announced that working-age benefits including the LHA would be frozen for four years37 and that the household benefit cap would be reduced from £26,000 to £20,000 (£23,000 in London).38 The Budget also announced that entitlement to housing support for new claims in Universal Credit would be removed from 18–21 year olds who are out of work (from April 2017).39 The Department for Work and Pensions has confirmed that vulnerable young people will be exempt from this change.40 We urge the Government to recognise that many 18–21 year olds are at significant risk of homelessness, and to make provision for those who have been in work but have lost their job to have a ‘grace period’ of, say, one to two months before the housing element of Universal Credit is withdrawn. As part of the October 2010 Spending Review the Government announced that the Shared Accommodation Rate (which limits the amount of housing benefit payable to the equivalent of a room in a shared house) would be extended to cover single people under the age of 35 from April 2012 (the implementation date was subsequently brought forward to 1 January 2012).41 It previously applied to those under 25.
31.The Homelessness Monitor is an annual report funded by Crisis and the Joseph Rowntree Foundation with the aim of providing an independent analysis of the impacts of policy and economic changes on rates of homelessness. The 2016 Homelessness Monitor identifies the weakening of welfare provision, including the Government’s restriction of housing benefits and tax credits to only take account of two children, as a cause in the increase in homelessness: “there are concerns that families with more than two children may find both affordable rented and social rented housing, not only in London, but also in much of the rest of the country, beyond their means”.42 The Monitor also describes the findings of a survey of local authorities carried out in 2015 to identify whether the reforms of the 2010–15 Coalition Government had impacted on levels of homelessness: two thirds (67 per cent) of local authorities in England reported that these changes had increased homelessness locally, with no respondents reporting that homelessness had consequentially decreased. When asked about the expected impact of the roll out of Universal Credit, 73 per cent anticipated that it would further increase homeless levels. The changes to the arrangements of rental payments were cited as the principal cause.43
32.Since 2008 and the introduction of LHA, housing benefit recipients in the private rented sector have received benefits directly, rather than them being paid to their landlord. We received evidence from a landlord with homes in Wiltshire that highlighted that “There is much more risk in taking a person on benefits as getting direct payments is not available until they are 8 weeks in arrears”.44 There is evidence to support the view that the removal of the direct payment of rental payments to landlords has increased levels of homelessness. A House of Commons Library Briefing Paper cites research carried out by the Department for Work and Pensions in 2010 that the direct payment of LHA to claimants had resulted in increased rent arrears (and evictions) of private sector tenants.45 Similarly, evidence we received from the Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University states that, in a survey of 1,000 private landlords, they found that the direct payment of housing benefits to claimants rather than landlords made them less willing to rent to benefit claimants and/or homeless people. Furthermore, two thirds of those landlords who were currently renting to these tenants only did so on the condition that benefits were paid direct to them.46
33.When asked about the direct payment of benefits to claimants rather than landlords, Marcus Jones MP told us:
The system of allowing the rent to go to the tenant and then the tenant paying the landlord is an extremely important thing in terms of the Government’s welfare reforms. The Government have been quite clear that we want to move people, where we are able to, from welfare into work, and, once somebody goes into work, they are in a position where they are responsible for paying all of their different household bills, including their rent—usually on a monthly basis—and that is the principle behind which the changes have been made in relation to the move to universal credit.47
34.The Government’s position is that claimants should receive the benefits they are due, and then take responsibility for their own arrangements to meet the costs of their outgoings. However we are concerned that this policy is having a direct impact on levels of homelessness. All recipients of housing support should have the option of having their housing benefits paid directly to their landlord, reducing the likelihood of them falling into arrears and increasing landlord confidence and willingness to let to tenants at risk of homelessness.
35.When we asked Giles Peaker, Chair of the Housing Law Practitioners Association, what the future of homelessness would be if no action was taken, he was unequivocal:
Will it get worse? Yes. Will it get worse faster? Yes. That is already happening, and is just going to continue … One thing that could be done is to stop making it worse. That is the simple answer. There are some immediate triggers facing us … The roll-out of the reduced benefit cap is going to have a fairly dramatic effect across the country, whereas the first £26,000 one basically affected London. £23,000 and £20,000 outside of London is going to have a dramatic national effect, really taking large swathes of public sector tenancies out of affordability for families in that situation. If the rents continue to increase whilst there is the LHA freeze, without wishing to be overly melodramatic, we are heading towards a serious crisis.48
36.The impact of the welfare reforms of recent years have increased pressure on levels of homelessness.
13 Q8 [Jon Sparkes]
15 Q9 [Kate Webb]
16 Q9 [Giles Peaker]
17 Q174 [Daisy-May Hudson]
20 HM Treasury, Summer Budget 2015, July 2015, para 1.137
22 “Bad news for tenants in Bristol – rents were up 9.2% last year and are set to increase in 2016”, Bristol Post, 12 January 2016
23 Q9 [Kate Webb]
24 Crisis, Home: No less will do, February 2016, p10
27 HM Treasury, Spending Review and Annual Statement 2015, November 2015, para 1.146
29 Q17 [Howard Sinclair]
30 Communities and Local Government Committee, Second Report of Session 2015–16, Housing associations and the Right to Buy, HC370, para 83
31 Q93 [Hazel Summers]
32 Q92
34 Q93 [Nick Hooper]
35 Q212
36 Communities and Local Government Committee, Second Report of Session 2015–16, Housing associations and the Right to Buy, HC370, para 80
37 HM Treasury, Summer Budget 2015, July 2015, para 1.137
38 HM Treasury, Summer Budget 2015, July 2015, para 1.152
39 HM Treasury, Summer Budget 2015, July 2015, para 1.159
40 PQ 9834 [Housing Benefit: Young People], 14 September 2015
42 Crisis, The Homelessness Monitor: England 2016, January 2016, page 15
43 Crisis, The Homelessness Monitor: England 2016, January 2016, page 16
45 Statutory Homelessness in England, Briefing Paper 01164, House of Commons Library, 5 July 2016, page 7
46 Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University, (HOL43), para 12
47 Q258
48 Q69 [Giles Peaker]
© Parliamentary copyright 2015
3 August 2016