LHA needs resetting based on current rents, rather than on the fiction that rents haven’t risen since 2019

Comment08.03.23by Kate Wareing

Kate Wareing explains why Soha is joining a petition being handed into government today to raise benefit levels

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LHA needs resetting based on current rents, rather than on the fiction that rents haven’t risen since 2019, says @KateSoha

Every month we at Soha Housing do a quick trawl of Rightmove for properties in South Oxfordshire (where most of our homes are) to see how many three-bed family homes are available to rent privately within the Local Housing Allowance (LHA) cap. This month’s answer was none.

The LHA cap for a three-bedroom house is £1,100 per month. The cheapest three-bed home available to rent was £1,450. Renting a similar house from us would cost about half that.

LHA rates have been frozen now since 2019. The gap between what the benefits system will contribute towards rent costs and what rent actually costs continues to grow, leaving families in increasingly impossible positions.

When the policy was introduced, the theory was that it would encourage people to move to cheaper properties. The reality in our area (and many others) is that these cheaper properties simply don’t exist, unless you can rent from a council or housing association.

This is £35 a week more than the £85 a week that Universal Credit will rise to in April. Importantly, it assumes that all housing costs will be met, rather than that this £85 will also have to contribute towards housing costs. We know that, with LHA frozen since 2019, this is pure fantasy in large areas of the country.

“In the short term, LHA needs resetting based on current rents, rather than on the fiction that rents haven’t risen since 2019”

So what are the answers?

In the short term, LHA needs resetting based on current rents, rather than on the fiction that rents haven’t risen since 2019. This change would benefit the 1.1 million households who are entitled to housing support and whose rent is above their LHA rate.

A reminder – these 1.1 million people are living on even less than basis Universal Credit levels of income after they have met their housing costs. Often drastically less. This is below subsistence levels.

Next, we need to build more homes for rent within LHA levels. At Soha we cap all our rents at LHA levels. We now have 300 ‘affordable rent’ properties that would be above LHA levels if we charged the full ‘affordable’ rent.

Local authorities have the power to insist that Section 106 homes built in their areas and sold for rent are at social rent. We want more local authorities to use this power.

We price our bids for Section 106 properties to break even over 40 years, as do most other housing associations. A lower rent yield means a lower bid to buy these homes, a lower return for the developer (which with notice means they pay less for the land) and a new supply of truly affordable social rent homes.

“Local authorities have the power to insist that Section 106 homes built in their areas and sold for rent are at social rent. We want more local authorities to use this power”

We must remember that we remain the sixth largest economy in the world. We have choices. Even without additional money being spent, we also invest powers in local authorities that could be used to increase the supply of social rent housing. With an increasingly unaffordable and potentially shrinking private rental sector, this needs to happen now.

Shelter, Save the Children, Little Village, 38 Degrees, Turn2us and 46 other organisations – including CPAG, Home-Start, the British Association of Social Workers and PlaceShapers, of which Soha is a member – are urging the government to act on benefits and increase financial support at the Spring Statement. Fellow housing professionals, as individuals or representing their organisations, have added their voices to the petition being submitted today.

Kate Wareing, chief executive, Soha Housing