The 'safety net' for private renters is shrinking fast
In the third of our safety net series we look at the role housing benefit and how, through a series of subtle changes, the safety net for renters is shrinking fast.
There are two parts to the safety net. One is the means-tested cash benefit such as jobseeker’s allowance. The other is made up of subsidies (free school meals, free prescriptions, council tax discounts and help with housing cost). It’s the changes to these subsidies and discounts that are really weakening the safety net, none more so than the changes to housing benefit.
The necessity of housing makes housing benefit (HB) a fundamental component of the safety net. It ensures that someone losing their job doesn’t immediately fall into arrears with their rent, possibly resulting in the loss of their home too. In doing so, it provides stability for job-seekers to focus on securing a future job rather than where they are going to sleep that night.
If you qualify for the cash benefit part of the safety net, you automatically qualify for HB too. For tenants in the private sector, HB provides money to help cover the rent (to be passed on to the landlord). There are rightly conditions on what can be claimed. Entitlement is based on the number of rooms required by the claimant’s family (not the size of the property they actually live in) and the typical cost of renting in their area. But since 2011, the government has made a series of changes that have tightened these conditions much further.
The broadest change is a reduction in the maximum amount that can be claimed in HB. Previously it was capped at the median rent for local properties (i.e. a rent level typical for that area). As of April 2011 this was brought down to the 30th percentile (i.e. 3 in 10 properties in the area would charge rents below the cap and 7 in 10 above it).
For ministers this was an easy policy to justify: why should the state subsidise families with unnecessarily high housing costs? But is expecting private sector HB claimants to live in the cheapest 30% of properties reasonable?
In 136 of England’s 326 local authorities more than 30% of private rented households claim HB. As such, in these areas it is impossible for everyone claiming to find accommodation within the cap. Just because some of those needing the safety net can find housing within the caps, doesn’t mean that everyone can. By comparison, only in eight local authority areas do more than half of private renters claim HB, so the former cap meant the safety net could catch almost everyone in need of it. The map below shows where these local authorities are.
This is just one of many recent changes which in effect are restrictions on HB. Others include:
- The infamous bedroom tax falling on those in the social rented sector
- A national HB cap for private tenants which means that in parts of Inner London the maximum amount that can be claimed is much lower than the 30% level
- The overall benefit cap which will see families with children unable to live in higher priced areas
- Increasing the age at which someone can claim for a one bedroom property rather than a shared house from 25 to 35
- Uprating the HB caps by less than the rise in local rents which mean that, over time, even fewer properties fall within the caps
There is another change coming too. At the moment the lower HB caps only affect those making a new claim after 13 weeks. This means that when someone loses their job they still have that period of security in which to find a new one before worrying about finding a new home. Under Universal Credit, this grace period will be withdrawn. Research by Shelter out yesterday shows just how necessary this grace period is. It found that a quarter of UK workers responding to their survey had no savings at all and would immediately find themselves struggling to keep up with housing costs if they lost their job.
If someone loses their job and needs safety net support – as millions every year do – their home is now no longer safe. Before 2011, this was rarely the case.
For some people it is impossible to meet these new HB constraints and for others it is becoming increasingly difficult. As a result it is much harder for those hitting hard times to get back on their feet – they now face the prospect of having to simultaneously look for a new job, a new home or face mounting debt. What kind of safety net is that?