£2.1 billion investment in housing benefit would prevent thousands from becoming homeless

Restoring the levels of housing benefit, otherwise known as Local Housing Allowance (LHA), so they truly cover market rents has the potential to prevent more than 6,000 households from being pushed into homelessness and also lift more than 35,000 children out of poverty in the next three years in the UK.

As part of Crisis’ Cover the Cost campaign, new research released today, conducted by Alma Economics, outlines the three-year cost and benefit analysis of a Government investment of £3.3 billion in LHA for immediate net benefits of £2.1 billion (1). More specifically, the charity is calling for £820 million in the next year as part of upcoming spending decisions.

Lifting the benefits freeze and investing in LHA would help thousands currently on the brink of homelessness as they could truly cover the cost of the cheapest 30% of market rents. Restored levels of LHA would also help those already homeless to afford a rented home and significantly reduce the number of families and individuals turning to their local council for help – reducing the use of homelessness services and extremely expensive temporary accommodation.

Alongside the immediate net benefits of £2.1 billion over the three years, this would also give the Government time to build a sufficient supply of truly affordable housing in the years to come whilst ensuring that homelessness across the country doesn’t continue to rise.

LHA is the housing benefit aspect of Universal Credit, providing support to those on low incomes who are unable to meet the cost of private rent. LHA rates were originally set to ensure the recipient could afford the cheapest third of properties in their area, meaning most were able to access a safe and stable home to build their lives in.

But following series of cuts to LHA over the years – including a four-year freeze from 2016 – the rates are not keeping up with the cost of rents in most areas across the country, meaning safe, affordable housing is becoming increasingly difficult to find.  With families and individuals often accumulating debt having to make up the shortfall between their LHA and rent, this mounting financial pressure means they are easily forced out of their home and into homelessness.

At its core, LHA provides the opportunity to prevent more people becoming homeless by providing the right support. This potential will only be fully reached though if it is sufficiently funded and helps provide the right level of financial security to those in vulnerable circumstances. This is why Crisis is now calling on the Government to commit to restoring the LHA rates so that they cover the true cost of rent.