Housing Costs (Reformed Welfare System)

Debate between Teresa Pearce and Debbie Abrahams

Tuesday 3rd March 2015 Commons Chamber

[Teresa Pearce]

It is true that solutions can be found. Sadly, no one seems to have found them yet in my part of south-east London.

The Work and Pensions Committee looked at the problems that are faced by people on housing benefit. They are discriminated against when looking for private rented accommodation. For families, that makes trying to find a roof over their heads an uphill struggle. Given that tenancies typically last for six to 12 months, private renters often have to move just as they have settled in. Children who live in such places have their life chances restricted and their education disrupted, and are often not registered with a doctor. That cannot be acceptable.

Private landlords may be reluctant to rent accommodation or provide temporary accommodation to claimants for a number of reasons. It might not just be general discrimination, but might be due to constraints that are imposed by mortgage lenders, who say that they are not allowed to provide longer tenancies, or due to fears that local authorities will fail to allocate housing benefit in a timely manner. Giving private renters the option of allowing the housing benefit component of their universal credit payment to go directly to their landlord might allay those fears and enable private renters to control their finances more easily. The Government must work with private sector landlords to address their concerns about universal credit and offer greater support to those who rent property to housing benefit claimants. That work must start now.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I grateful to my colleague on the Work and Pensions Committee for giving way. I met my key local social housing provider on Friday. It said that there was a 15% gap in rent collection between those on universal credit and those not on universal credit. That is manageable over a year or so, but over the longer term it will create huge problems. I wonder whether my hon. Friend wants to comment on that point.

[Teresa Pearce]

That is a valid point. It is something that we all encounter locally when we talk to housing providers. It needs to be addressed, so I thank my hon. Friend for her intervention.

Another problem for private renters is that the change to local housing allowance is further restricting their access to the widest selection of available properties. Local housing allowance rates match only the 30th per- centile of homes within a broad rental market area. The Government reduced that from the 50th percentile. I believe that that needs to be re-evaluated urgently, especially in London. Rents have risen, but the local housing allowance was frozen in 2012-13 and uprated by 1% in 2014. There has been a reduction in the number of homes that can be rented out at that rate.

An analysis by Crisis shows that across Britain, one in 10 local housing allowance rates for 2015-16 is 5% or more lower than the estimated 30th percentile of local rents. Those include 77 rates that have already benefited from an additional increase due to the targeted affordability fund. As was outlined in the Select Committee’s report, analysis by the Institute for Fiscal Studies shows that rent levels did not decline as a result of the cap. In fact, the most recent rental figures show a 1.8% rise across the stock in England and a rise of 2.4% in London. That is well above the recent 1% cap and means that additional properties will fall out of the reach of those on benefit.

Private renters should not have to choose between having a roof over their heads and eating, but increasingly that is becoming a daily choice for many people in my constituency. The Government should consider increasing LHA rates by more than 1% annually in more pressured areas. Although the Committee welcomed the introduction of the targeted affordability fund as a means of increasing LHA levels in areas of higher rents, some areas may see rents rising by more than the maximum of 4% a year. The Government should amend the targeted affordability fund so that it can be paid at higher levels in areas where rent increases are greater than 4%. It should also use available rents rather than stock rents as a measure for the rental increase.

Rents are currently unaffordable across the private sector. In 2012, the Money Advice Trust stated that rent arrears were the fastest growing debt problem it had encountered and that the number of calls it received on the issue had risen by 37% on the previous year. At the end of 2014, the National Landlords Association reported that almost a third of private landlords had seen arrears that year. There were a record number of evictions of renters across the social and private sector in 2014 as a result of a combination of factors, including the bedroom tax, benefit sanctions, increased numbers renting with the reduced LHA rate, and rising private sector rents.

Recent figures from Crisis have also shown that the No. 1 leading cause of homelessness now is eviction from a private tenancy. The figures highlight not just the lack of affordability for renters when having to manage competing living costs, but how unsustainable rising rents will be for the private rented sector without Government intervention.

The Government must continue to monitor homelessness levels and take action to mitigate the impact on households and local authorities. The Department for Communities and Local Government reported that rough sleeping increased by 14% in autumn 2014. I am regularly contacted by constituents who tell me that they cannot be housed by their local council because they are not in priority need and that they have no option but to live in overcrowded accommodation with family members or to couch-surf, which is code for sleeping on the floor of a friend’s house. If they can be housed, they have been told that their only option is temporary accommodation. In my local area of Bexley, people are often temporarily accommodated in Manchester and Bolton, which means having to uproot their children from school and leave their support networks behind.

It always worries me greatly that, while a number of landlords are reputable, a number of others are not. There are private landlords in my constituency who line their pockets while renters struggle to pay their rent. I wrote to Her Majesty’s Revenue and Customs and the Treasury in November to ask about the Let Property campaign, which was launched in September 2013 to target the residential property letting market. Specifically, I wanted to know whether it had been successful in closing the tax gap on let properties, but the responses I received were not encouraging. They said it was too early to tell, but one of the figures they did give me was an estimate that the tax gap on letting income was just over £500 million. It is absolutely disgraceful that public money is going to landlords who do not then pay their way or their tax. We need to address that urgently.