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Think tank calls for London welfare changes

A think tank has called for welfare reforms to be altered in London to address the housing problems faced in the capital.

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In the short term the Institute for Public Policy Research is calling for local housing allowance caps in London to be raised by £10. In the longer term it wants to see power and responsibility for housing benefit devolved to the mayor of London.

Currently LHA rates are set at between £250 and £400 a week, depending on the size of the property. This applies nationally, but has most impact in London because of high rents.

In its report, Affordable capital?, the IPPR argues for a range of radical measures after predicting that current policies would see London face a housing deficit of 325,000 homes by 2025.

It says the role housing associations can play in tackling housing shortages should be explored in more depth, including the option of them building more homes for market rent, and also calls for public land to be released for development.

It also says regulation of the private rented sector should be explored, including setting maximum base rents within the LHA market, and setting up an accreditation scheme for private landlords, and a ‘rent stabilisation board’ to check for ‘unreasonable rent rises’.

The think tank calls for and the imposition of a ‘piggy bank tax’ on foreign buyers of properties worth more than £2 million, and says newly re-elected mayor Boris Johnson must make housing a priority.

‘London is facing a housing crisis exacerbated by the rest of the UK’s reluctance to fund housing benefit costs in the capital,’ said Andy Hull, a senior research fellow at the IPPR.

‘Families who find themselves living with a shortfall in their rent as a result of benefit changes are likely to struggle to find affordable alternatives because of the shortage and high cost of housing in London.

‘The mayor should be able to determine how housing benefit is allocated across London and set the relevant limits in line with prevailing market and economic conditions. This would enable the mayor to adjust the current caps and remove the worst iniquities which he spoke out against during his campaign.’

In a separate report examining the housing market in Bradford, the IPPR has called for the localism agenda to be applied to welfare reform by omitting housing benefit from the universal credit when it comes in next year.

The think tank further argues that allowing local authorities to set housing benefit rates would give them a ‘powerful bargaining chip’ to equalise the private rented market.

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