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More than 60,000 renters in London likely to become homeless: 'We can't continue like this'

A failure to unfreeze local housing allowance could see 60,000 renters in London lose their homes by 2030, cementing the city as the ‘epicentre of the national homelessness crisis’

renters facing homelessness in London

One in seven private renters in London are reliant on local housing allowance rates to determine whether they can meet their housing costs. Image: ziodanilo / Pixabay

Almost 60,000 Londoners living in the private rented sector are likely to become homeless by 2030 if the government maintains the freeze on local housing allowance (LHA) rates.

That’s the warning from London Councils, which has called on the government to take “emergency action” to raise LHA rates at the upcoming Autumn Statement to meet 30% of local market rents as it last did in 2020.

Without it, councillors are warning of a new wave of homelessness this winter. The Big Issue has also been calling for local housing allowance rates to be unfrozen to protect millions of low-income renters as part of our End Housing Insecurity Now campaign.

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Councillor Darren Rodwell, London Councils’ executive member for regeneration, housing and planning, said: “Raising local housing allowance is vital for getting a grip on the homelessness crisis.

“London is the epicentre of the national homelessness crisis. The situation is increasingly unmanageable and requires urgent government action. We cannot continue in this disastrous direction.

“Just as the government boosted LHA during the Covid-19 pandemic to prevent a wave of mass homelessness, we need a similar emergency response to the situation today. An increase in LHA will help low-income households pay their rents and avoid homelessness, which can be so devastating to families and bring massive costs to local services.”

Rishi Sunak was the last chancellor to raise LHA rates in 2020. A government spokesperson previously told The Big Issue ministers spent £1bn raising rates three years ago, giving more than a million people an extra £600.

But rents have risen to record highs ever since and frozen LHA rates mean housing benefits have not kept pace, leaving tenants at risk of losing their homes or struggling to find a new private rented property in their price range.

One in seven private renters in London are reliant on LHA to meet their housing costs, according to London Councils.

Analysis from Alma Economics, released by London Councils, found an additional 16,500 to 22,000 London households will become homeless by 2030 If LHA rates remain at current levels.

That means an estimated 58,740 people pushed into homelessness, including 28,000 children.

London already accounts for 57% of England total number of homeless households living in temporary accommodation with 170,000 Londoners in non-permanent homes arranged by their local authority. That means one in 50 Londoners are living in temporary accommodation, including one in 23 children.

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As a result, councils across London’s boroughs are set to overspend their homelessness budgets by £90m this year.

Alma Economics’ research found restoring LHA to 30% of local market rents could ease homelessness pressures as well as the impact on the NHS and social care to save more than £100m a year.

Polly Neate, chief executive of Shelter, said: “Homelessness has reached record levels, and the government has nobody to blame but themselves.  

“Housing benefit is meant to cover the bottom third of local rents, but it has been frozen since 2020 while rents have soared to a record high. This combined with decades of failure to build enough affordable social homes has left hundreds of thousands of private renters with huge shortfalls and more and more of them are becoming homeless. As a result, too many families will spend this winter in cramped one-room temporary accommodation where walls are covered in mould and children have no space to play. 

“The government has an immediate opportunity to take the pressure off council housing services and stop rising homelessness. It must use the Autumn Statement to unfreeze housing benefit so families can afford to keep a roof over their heads this winter.” 

London Councils are the latest local authorities to sound the alarm on a growing homelessness and temporary accommodation crisis that threatens to push local government finances beyond the limit.

Earlier this week, 119 council leaders wrote to chancellor Jeremy Hunt urging him to take action as spending on temporary accommodation hit £1.7bn across England.

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The plea for support, which came from councils led by Conservatives, Labour, Liberal Democrats, the Green Party and Independents, followed an emergency summit held last week co-hosted by Eastbourne Borough Council and the District Councils’ Network.

Local authorities called for LHA rates to be raised as well as a £450m package to increase discretionary housing payments and homelessness prevention grant funding. Longer-term funding and policies to boost the supply of social housing and private rented properties was also on the councils’ wish list.

Councillor Hannah Dalton, the District Councils’ Network housing spokesperson, said: “The fact that 119 council leaders from all political groups have joined up to demand urgent action from the Chancellor on homelessness demonstrates that we are in an emergency situation, right across the country.

“Councils simply do not have the money to cope with this surge of demand for temporary accommodation and without action from Jeremy Hunt they will have no option but to cut services. Such is the scale of the problem that some councils will find themselves effectively bankrupt.

A government spokesperson said: “We’re helping to ease the pressure of rising rents, investing over £30 billion on housing support this year on top of record financial support worth around £3,300 per household.

“We’ve also maintained our £1billion boost to local housing allowance while our discretionary housing payments provide a safety net for anyone struggling.”

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