Local Housing Allowance

Christina Rees Excerpts

Wednesday 15th March 2023 Westminster Hall

[Christina Rees (Neath) (Ind)]

It is a pleasure to see you in the Chair, Ms Elliott. I congratulate the hon. Member for Arfon (Hywel Williams) on securing this very important debate.

Wales is facing a housing crisis because there is a shortage of affordable properties that people can purchase or rent. That shortage forces many low-income households to move into a property that they cannot afford, risking financial hardship, or into a property that is in poor condition, risking ill health, or to seek assistance from local authority homelessness services. The local housing allowance, introduced in 2008, is the amount of housing benefit, or the housing element of universal credit, available to those who are renting from private landlords. The amount of support provided is based on the area in which the individual lives and the number of bedrooms they require. There are a number of LHA determining factors, including allowing a tenant to rent in the cheapest third, 30th percentile, of properties within a market area, which depends on the location of the property—Wales is divided into 23 broad rental market areas—and on the number of bedrooms to which a household is entitled.

However, despite the good intentions behind the LHA, the scheme has been the subject of much criticism and controversy. In many areas, the LHA does not cover the full cost of renting a property, leaving individuals and families in a precarious financial situation. The issues have recently been exacerbated, as LHA rates have been frozen since 2020 at the level of 2018-19 private rental rates. Research by the Bevan Foundation found that in my Neath constituency, 51 properties were advertised for rent in February 2023, but not one property was covered by the LHA rate. Furthermore, the gap between market rents and the LHA rate in my constituency is £95.93 for a one-bedroom property, £113.33 for a two-bedroom property, £146.24 for a three-bedroom property and £251.45 for a four-bedroom property. That means that many people in Neath face the prospect of homelessness, with some being forced to choose between paying their rent and putting food on the table. That is an unacceptable situation that needs to be addressed urgently.

One solution to the problem is to increase the LHA rate for the area. That would provide much-needed relief to those who are struggling to pay their rent and would help to prevent homelessness. The Welsh Government have already taken steps to address this issue with the introduction of the Welsh housing quality standard and the Housing (Wales) Act 2014. However, more needs to be done. The UK Government must recognise the unique challenges facing areas such as Neath and take action to ensure that the LHA rates are sufficient to cover the cost of renting a property. That not only would help those who are struggling to make ends meet but would have wider economic benefits by reducing the number of people who are at risk of homelessness and supporting the local rental market.

However, low-income tenants may face more barriers when looking for properties in the private rental sector, and many may find them difficult or impossible to overcome. Examples are requirements for deposits of more than one month’s rent, guarantors, credit checks, minimum income checks, and professional-only tenants. The Bevan Foundation found only 32 properties in Wales at or below the LHA rate. Twenty-three also had one or more of the barriers that I just mentioned. To put it another way, only nine properties fully covered by the LHA did not require one or more of the additional qualifications. Seven were in Cardiff, one in Ceredigion and one in Rhondda Cynon Taf; there was none in my constituency of Neath.

The local housing allowance is a vital scheme that provides much-needed financial assistance to those who are struggling to pay their rent, but current rates of LHA are inadequate in many areas, including my constituency of Neath. It is time for the UK Government to take action to address the issue, and to ensure that LHA rates are sufficient to cover the cost of renting a property. The Chancellor could have used his Budget today to uplift LHA rates to the contemporary 30th percentile, providing housing security and decreasing mental and physical illness among those struggling to pay their rent. By not taking action, the Chancellor has increased pressure on local authorities, which will drive up the use of temporary accommodation. He has not prevented homelessness, not supported the local rental market and not provided a brighter future for the people of Neath, Wales and the UK in their home.