The Government has announced that the freeze on housing benefits, in place since 2015, will end next year, baring of course any upset to the outlook following the December general election.
Thousands of private renters in England claim housing benefit in order to help cover the cost of their rent. Many of these renters are working, but their income won’t stretch to afford private rents in their local area. Private rents have been rising consistently for several years now, and between 2011 and 2019 they rose in 79% of the country.
Local Housing Allowance (LHA) rates are calculated for every local area based on local rents. The maximum amount of support a household can claim will depend on where they live, the minimum number of bedrooms they need and their current income.
LHA won’t always cover the full cost of renting and anyone who claims housing benefit is expected to find a home to rent which is cheaper than the average for their local area. Housing benefit levels are set at, or below, the cost of renting a home in the bottom third of the private rental market.
Since 2010 housing benefit levels have not risen in line with rising private rents, and current freeze means that they will remain frozen at their 2016 levels until 2020, regardless of how much private rents have gone up by in each local area.
This means that most private renters on housing benefit will face a monthly shortfall between the actual cost of their rent, and the support available. Some locations are far worse than others for tenants in the regard, the bigger cities such as London and other well-known expensive postcodes including places such as Milton Keynes, Oxford, Luton, Warrington and Bristol being the worst.
Meanwhile, the government plans to give thousands more people a step-up onto the housing ladder
with a new national model for shared ownership. Social tenants moving into new homes will be given the chance to buy a share with just a 10% minimum initial stake required, cut from 25% for all shared ownership homes.
The plans will allow people to buy their homes in 1% chunks, rather than 10% at a time with a package of measures to help people on lower incomes get onto the housing ladder confirmed by the Housing Secretary Robert Jenrick (17 October 2019).
This was announced over the summer, that the government is reviewing a new national model for shared ownership to make it far easier for people to buy more of their own home, including allowing them to buy in 1% increments. In some areas, this will mean people can get on the housing ladder with deposits as low as £2,000.
This new policy is designed to help to fulfil the new Prime Minister’s priority to “level up” the whole country, closing the opportunity gap and helping millions of young people into home ownership.
Housing Secretary Robert Jenrick MP said:
“Many people want to own their home, but can’t see a route towards achieving that goal. This government is determined to help people realise that ambition and boost ownership for thousands of hard-working people up and down the country.
“Owning a home is not just about the four walls around you, it’s about investing in your family, saving for the future and putting down roots in a community.
“These measures announced… [17 October 2019] will mean more people, including residents living in new housing association homes, are given the opportunity to get on to the housing ladder.”