Wednesday, 23 July 2014

Young homeless shut out of London's rented sector

Welfare reforms mean only 5.5 per cent of shared properties in London are now affordable for under 35s on housing benefit, a study has found.

Charity Homeless Link examined 55,537 property listings to assess the impact of the government’s decision to raise the age threshold for the shared accommodation rate from 25 to 35.

It found only 5.5 per cent of the properties are affordable, and that demand for the few available rooms is increasing, with 12,000 extra people looking for accommodation following the change to the SAR rules.

The change was brought in at the start of 2012, and means single people under the age of 35 can only claim housing benefit to cover the cost of a room in a shared property rather than a whole house or flat. Previously the restriction only applied to 18- to 25-year-olds.

Homeless Link said the findings of its research suggest welfare reform is adding to London’s ‘already severe housing crisis’.

The charity is calling for housing benefit rates to be adjusted to reflect the true cost of renting in London. It argues 30 per cent of properties should be accessible to people on benefits, because benefit payments for private tenants are set at the thirtieth percentile of local rents.

Rick Henderson, chief executive of Homeless Link, said: ‘The bottom line is that the housing crisis must be fixed and the dysfunctionality of the housing market needs to be addressed. In the short-term, government must make in-roads by ensuring that more properties are affordable and encouraging landlords to open their doors to those on benefits.’

Less than 1 per cent of the listings Homeless Link looked at said the landlord would accept tenants on benefits.

The government announced this week that it is giving just over £1 million to Crisis, the charity for single homeless people, to support projects helping vulnerable people find homes in the private rented sector.

The bulk of this funding - £800,000 – will be spent supporting eight projects specifically intended to help under 35s find rooms in shared properties. The remaining £230,000 will be spent supporting existing projects that help people find private rented sector properties.

Readers' comments (6)

  • Does/did the Rent Officer use a "weighted average" to determine 30th percentile?

    That may be why only 5.5% of properties fall within the 30th percentile - in same way that average salary is way higher than median salary.

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  • An increased supply of low-rent social housing would help, and rent controls in the private sector.

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  • In the 60s and 70s when we last had rent control - supply of private rentals went through the floor.

    You can still see the odd auction property with an old fixed rent sitting tenant in situ - where the property is thus devalued by maybe 50% or more - depending on age of tenant.

    One cannot divorce supply and demand - and falling supply of any commodity usually leads to price rise as inevitably there is greater competition for a more scarce entity.

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  • Progressive Solutions Required

    "In the 60s and 70s when we last had rent control - supply of private rentals went through the floor." - absolutely, yet at the same time homelessness was reduced to an all time low, affordability of housing was universal as was supply, and mortgage lending was highly conservative ensuring minimal risk of bad debt.

    Now, Realist, was this really so bad?

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  • The issue is that rent controls in PRS are proven to reduce supply - and as we have a growing population - exacerbated by immigration - and as SRS is not providing new units of housing - it is myopic to suggest strangling the alternate supplier!

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  • Clearly the arguments against regulation of private rental properties and the non regulation are based on the same problem not enough affordable private rental market. And whilst the article highlights the problems of the unemployed under 35's getting affordable housing, it actually applies to the employed market as well.
    To suggest that the problem is being caused by not enough new housing is ridiculous, when there is such a lot of unoccupied property all over the country.
    The real problem is that most of the unoccupied property is owned by private landlords who are only in it for the money they can get out of it and in high unemployment and student areas that is seen as being a cash cow. Except the cash cow is disappearing. Councils and government are stricter when it comes to the unemployed and the student population available to the private landlords is shrinking because of the amount of 'new build student specific' property that is going up. Yet everyday perfectly good family homes are being ripped apart by private landlords and converted into multi-bedroom properties that are then made only available to students.
    Around me, so many of these conversions have been standing empty for over 12 months and still they are doing it.
    These properties are not being made available to either the employed or unemployed regardless of age. The rents being asked are higher than the market can stand as landlords try to recoup their losses.
    If it is happening in Manchester then it happens in London too.
    In my opinion all landlord groups should have some form of rental capping and then so many wouldn't be so fast to get into a market that doesn't have a high return. Yes it would have an effect on the private landlord market but is that such a bad thing?

    If it deters the profiteers for whom a quick return wouldn't be so attractive, is this so bad?
    If it makes more property available on the market thus bringing purchase prices down, is this so bad?
    It would give banks a reason to re-consider their approach to mortgages which at the moment is very tight. Surely a good result?
    I realise this isn't perfect a solution but is it so bad if it gets people regardless of age off the streets?

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